Correlation Between Aesapar Fundo and IRIDIUM FUNDO

Can any of the company-specific risk be diversified away by investing in both Aesapar Fundo and IRIDIUM FUNDO at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Aesapar Fundo and IRIDIUM FUNDO into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Aesapar Fundo de and IRIDIUM FUNDO DE, you can compare the effects of market volatilities on Aesapar Fundo and IRIDIUM FUNDO and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Aesapar Fundo with a short position of IRIDIUM FUNDO. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aesapar Fundo and IRIDIUM FUNDO.

Diversification Opportunities for Aesapar Fundo and IRIDIUM FUNDO

0.85

Correlation Coefficient

Aesapar Fundo  IRIDIUM FUNDO

Very poor diversification

The 3 months correlation between Aesapar and IRIDIUM is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Aesapar Fundo de and IRIDIUM FUNDO DE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IRIDIUM FUNDO DE and Aesapar Fundo is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Aesapar Fundo de are associated (or correlated) with IRIDIUM FUNDO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IRIDIUM FUNDO DE has no effect on the direction of Aesapar Fundo i.e., Aesapar Fundo and IRIDIUM FUNDO go up and down completely randomly.

Pair Corralation between Aesapar Fundo and IRIDIUM FUNDO

Assuming the 90 days trading horizon Aesapar Fundo de is expected to generate 1.03 times more return on investment than IRIDIUM FUNDO. However, Aesapar Fundo is 1.03 times more volatile than IRIDIUM FUNDO DE. It trades about 0.16 of its potential returns per unit of risk. IRIDIUM FUNDO DE is currently generating about 0.15 per unit of risk. If you would invest  9,406  in Aesapar Fundo de on October 12, 2024 and sell it today you would earn a total of  464.00  from holding Aesapar Fundo de or generate 4.93% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Aesapar Fundo de  vs.  IRIDIUM FUNDO DE

Aesapar Fundo de

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aesapar Fundo de has generated negative risk-adjusted returns adding no value to fund investors. Despite weak performance in the last few months, the Fund's technical and fundamental indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

IRIDIUM FUNDO DE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days IRIDIUM FUNDO DE has generated negative risk-adjusted returns adding no value to fund investors. Despite somewhat strong forward indicators, IRIDIUM FUNDO is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Aesapar Fundo and IRIDIUM FUNDO

The main advantage of trading using opposite Aesapar Fundo and IRIDIUM FUNDO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aesapar Fundo position performs unexpectedly, IRIDIUM FUNDO can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in IRIDIUM FUNDO will offset losses from the drop in IRIDIUM FUNDO's long position.

The idea behind Aesapar Fundo de and IRIDIUM FUNDO DE pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.