Correlation Between Recrusul and Plano Plano

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

By analyzing existing cross correlation between Recrusul SA and Plano Plano Desenvolvimento, you can compare the effects of market volatilities on Recrusul and Plano Plano 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 Recrusul with a short position of Plano Plano. Check out your portfolio center. Please also check ongoing floating volatility patterns of Recrusul and Plano Plano.

Diversification Opportunities for Recrusul and Plano Plano

0.37

Correlation Coefficient

Recrusul  Plano Plano

Weak diversification

The 3 months correlation between Recrusul and Plano is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Recrusul SA and Plano Plano Desenvolvimento in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Plano Plano Desenvol and Recrusul 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 Recrusul SA are associated (or correlated) with Plano Plano. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Plano Plano Desenvol has no effect on the direction of Recrusul i.e., Recrusul and Plano Plano go up and down completely randomly.

Pair Corralation between Recrusul and Plano Plano

Assuming the 90 days trading horizon Recrusul SA is expected to generate 3.35 times more return on investment than Plano Plano. However, Recrusul is 3.35 times more volatile than Plano Plano Desenvolvimento. It trades about 0.12 of its potential returns per unit of risk. Plano Plano Desenvolvimento is currently generating about -0.04 per unit of risk. If you would invest  101.00  in Recrusul SA on September 13, 2024 and sell it today you would earn a total of  45.00  from holding Recrusul SA or generate 44.55% return on investment over 90 days.

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

Recrusul SA  vs.  Plano Plano Desenvolvimento

Recrusul SA

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Recrusul SA are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Recrusul unveiled solid returns over the last few months and may actually be approaching a breakup point.

Plano Plano Desenvol

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Plano Plano Desenvolvimento has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the 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 Recrusul and Plano Plano

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

The idea behind Recrusul SA and Plano Plano Desenvolvimento 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.