Correlation Between Fundo De and Companhia Habitasul

Can any of the company-specific risk be diversified away by investing in both Fundo De and Companhia Habitasul 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 Fundo De and Companhia Habitasul into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Fundo de Investimento and Companhia Habitasul de, you can compare the effects of market volatilities on Fundo De and Companhia Habitasul 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 Fundo De with a short position of Companhia Habitasul. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fundo De and Companhia Habitasul.

Diversification Opportunities for Fundo De and Companhia Habitasul

0.61

Correlation Coefficient

Fundo De  Companhia Habitasul

Poor diversification

The 3 months correlation between Fundo and Companhia is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Fundo de Investimento and Companhia Habitasul de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Companhia Habitasul and Fundo De 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 Fundo de Investimento are associated (or correlated) with Companhia Habitasul. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Companhia Habitasul has no effect on the direction of Fundo De i.e., Fundo De and Companhia Habitasul go up and down completely randomly.

Pair Corralation between Fundo De and Companhia Habitasul

Assuming the 90 days trading horizon Fundo de Investimento is expected to generate 0.67 times more return on investment than Companhia Habitasul. However, Fundo de Investimento is 1.48 times less risky than Companhia Habitasul. It trades about -0.05 of its potential returns per unit of risk. Companhia Habitasul de is currently generating about -0.07 per unit of risk. If you would invest  14,075  in Fundo de Investimento on October 25, 2024 and sell it today you would lose (2,096) from holding Fundo de Investimento or give up 14.89% of portfolio value over 90 days.

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

Fundo de Investimento  vs.  Companhia Habitasul de

Fundo de Investimento

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fundo de Investimento has generated negative risk-adjusted returns adding no value to fund investors. Despite latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Companhia Habitasul

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Companhia Habitasul de has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Preferred Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Fundo De and Companhia Habitasul

The main advantage of trading using opposite Fundo De and Companhia Habitasul positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fundo De position performs unexpectedly, Companhia Habitasul 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 Companhia Habitasul will offset losses from the drop in Companhia Habitasul's long position.

The idea behind Fundo de Investimento and Companhia Habitasul 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.