Correlation Between Sporting Clube and CTT Correios

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

By analyzing existing cross correlation between Sporting Clube de and CTT Correios de, you can compare the effects of market volatilities on Sporting Clube and CTT Correios 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 Sporting Clube with a short position of CTT Correios. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sporting Clube and CTT Correios.

Diversification Opportunities for Sporting Clube and CTT Correios

0.36

Correlation Coefficient

Sporting Clube  CTT Correios

Weak diversification

The 3 months correlation between Sporting and CTT is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Sporting Clube de and CTT Correios de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CTT Correios de and Sporting Clube 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 Sporting Clube de are associated (or correlated) with CTT Correios. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CTT Correios de has no effect on the direction of Sporting Clube i.e., Sporting Clube and CTT Correios go up and down completely randomly.

Pair Corralation between Sporting Clube and CTT Correios

Assuming the 90 days trading horizon Sporting Clube is expected to generate 5.65 times less return on investment than CTT Correios. In addition to that, Sporting Clube is 1.47 times more volatile than CTT Correios de. It trades about 0.05 of its total potential returns per unit of risk. CTT Correios de is currently generating about 0.42 per unit of volatility. If you would invest  523.00  in CTT Correios de on December 27, 2024 and sell it today you would earn a total of  235.00  from holding CTT Correios de or generate 44.93% return on investment over 90 days.

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

Sporting Clube de  vs.  CTT Correios de

Sporting Clube de

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sporting Clube de are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively conflicting basic indicators, Sporting Clube may actually be approaching a critical reversion point that can send shares even higher in April 2025.

CTT Correios de

Risk-Adjusted Performance

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in CTT Correios de are ranked lower than 33 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, CTT Correios unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sporting Clube and CTT Correios

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

The idea behind Sporting Clube de and CTT Correios 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.