Correlation Between Alfa Holdings and Cambuci SA

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

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

Diversification Opportunities for Alfa Holdings and Cambuci SA

0.46

Correlation Coefficient

Alfa Holdings  Cambuci SA

Very weak diversification

The 3 months correlation between Alfa and Cambuci is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Alfa Holdings SA and Cambuci SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cambuci SA and Alfa Holdings 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 Alfa Holdings SA are associated (or correlated) with Cambuci SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cambuci SA has no effect on the direction of Alfa Holdings i.e., Alfa Holdings and Cambuci SA go up and down completely randomly.

Pair Corralation between Alfa Holdings and Cambuci SA

Assuming the 90 days trading horizon Alfa Holdings SA is expected to under-perform the Cambuci SA. In addition to that, Alfa Holdings is 1.37 times more volatile than Cambuci SA. It trades about -0.35 of its total potential returns per unit of risk. Cambuci SA is currently generating about 0.02 per unit of volatility. If you would invest  1,037  in Cambuci SA on December 31, 2024 and sell it today you would earn a total of  8.00  from holding Cambuci SA or generate 0.77% return on investment over 90 days.

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

Alfa Holdings SA  vs.  Cambuci SA

Alfa Holdings SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Alfa Holdings SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Preferred Stock's basic indicators remain comparatively stable which may send shares a bit higher in May 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Cambuci SA

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Cambuci SA are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Cambuci SA is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Alfa Holdings and Cambuci SA

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

The idea behind Alfa Holdings SA and Cambuci SA 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.