Correlation Between So Carlos and Tecnisa SA

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

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

Diversification Opportunities for So Carlos and Tecnisa SA

0.77

Correlation Coefficient

So Carlos  Tecnisa SA

Poor diversification

The 3 months correlation between SCAR3 and Tecnisa is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding So Carlos Empreendimentos and Tecnisa SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tecnisa SA and So Carlos 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 So Carlos Empreendimentos are associated (or correlated) with Tecnisa SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tecnisa SA has no effect on the direction of So Carlos i.e., So Carlos and Tecnisa SA go up and down completely randomly.

Pair Corralation between So Carlos and Tecnisa SA

Assuming the 90 days trading horizon So Carlos Empreendimentos is expected to under-perform the Tecnisa SA. But the stock apears to be less risky and, when comparing its historical volatility, So Carlos Empreendimentos is 2.65 times less risky than Tecnisa SA. The stock trades about -0.1 of its potential returns per unit of risk. The Tecnisa SA is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  138.00  in Tecnisa SA on September 23, 2024 and sell it today you would earn a total of  0.00  from holding Tecnisa SA or generate 0.0% return on investment over 90 days.

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

So Carlos Empreendimentos  vs.  Tecnisa SA

So Carlos Empreendimentos

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days So Carlos Empreendimentos has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain 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.

Tecnisa SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tecnisa 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 Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with So Carlos and Tecnisa SA

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

The idea behind So Carlos Empreendimentos and Tecnisa 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.