Correlation Between Grupo SBF and Lojas Quero

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

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

Diversification Opportunities for Grupo SBF and Lojas Quero

0.69

Correlation Coefficient

Grupo SBF  Lojas Quero

Poor diversification

The 3 months correlation between Grupo and Lojas is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Grupo SBF SA and Lojas Quero Quero SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lojas Quero Quero and Grupo SBF 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 Grupo SBF SA are associated (or correlated) with Lojas Quero. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lojas Quero Quero has no effect on the direction of Grupo SBF i.e., Grupo SBF and Lojas Quero go up and down completely randomly.

Pair Corralation between Grupo SBF and Lojas Quero

Assuming the 90 days trading horizon Grupo SBF is expected to generate 2.55 times less return on investment than Lojas Quero. But when comparing it to its historical volatility, Grupo SBF SA is 1.24 times less risky than Lojas Quero. It trades about 0.07 of its potential returns per unit of risk. Lojas Quero Quero SA is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  216.00  in Lojas Quero Quero SA on December 30, 2024 and sell it today you would earn a total of  79.00  from holding Lojas Quero Quero SA or generate 36.57% return on investment over 90 days.

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

Grupo SBF SA  vs.  Lojas Quero Quero SA

Grupo SBF SA

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Grupo SBF SA are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Grupo SBF unveiled solid returns over the last few months and may actually be approaching a breakup point.

Lojas Quero Quero

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Lojas Quero Quero SA are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Lojas Quero unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Grupo SBF and Lojas Quero

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

The idea behind Grupo SBF SA and Lojas Quero Quero 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.