Correlation Between Semapa and Corticeira Amorim

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

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

Diversification Opportunities for Semapa and Corticeira Amorim

0.58

Correlation Coefficient

Semapa  Corticeira Amorim

Very weak diversification

The 3 months correlation between Semapa and Corticeira is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Semapa and Corticeira Amorim in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Corticeira Amorim and Semapa 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 Semapa are associated (or correlated) with Corticeira Amorim. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Corticeira Amorim has no effect on the direction of Semapa i.e., Semapa and Corticeira Amorim go up and down completely randomly.

Pair Corralation between Semapa and Corticeira Amorim

Assuming the 90 days trading horizon Semapa is expected to generate 1.19 times more return on investment than Corticeira Amorim. However, Semapa is 1.19 times more volatile than Corticeira Amorim. It trades about 0.14 of its potential returns per unit of risk. Corticeira Amorim is currently generating about 0.01 per unit of risk. If you would invest  1,406  in Semapa on December 30, 2024 and sell it today you would earn a total of  144.00  from holding Semapa or generate 10.24% return on investment over 90 days.

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

Semapa  vs.  Corticeira Amorim

Semapa

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Semapa are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain primary indicators, Semapa may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Corticeira Amorim

Risk-Adjusted Performance

Very Weak

Over the last 90 days Corticeira Amorim has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Corticeira Amorim 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 Semapa and Corticeira Amorim

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

The idea behind Semapa and Corticeira Amorim 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 Transaction History module to view history of all your transactions and understand their impact on performance.