Correlation Between Sequoia Logstica and Aeris Indstria

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

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

Diversification Opportunities for Sequoia Logstica and Aeris Indstria

0.48

Correlation Coefficient

Sequoia Logstica  Aeris Indstria

Very weak diversification

The 3 months correlation between Sequoia and Aeris is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Sequoia Logstica e and Aeris Indstria e in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aeris Indstria e and Sequoia Logstica 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 Sequoia Logstica e are associated (or correlated) with Aeris Indstria. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aeris Indstria e has no effect on the direction of Sequoia Logstica i.e., Sequoia Logstica and Aeris Indstria go up and down completely randomly.

Pair Corralation between Sequoia Logstica and Aeris Indstria

Assuming the 90 days trading horizon Sequoia Logstica e is expected to under-perform the Aeris Indstria. But the stock apears to be less risky and, when comparing its historical volatility, Sequoia Logstica e is 3.8 times less risky than Aeris Indstria. The stock trades about -0.22 of its potential returns per unit of risk. The Aeris Indstria e is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  562.00  in Aeris Indstria e on September 17, 2024 and sell it today you would earn a total of  288.00  from holding Aeris Indstria e or generate 51.25% return on investment over 90 days.

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

Sequoia Logstica e  vs.  Aeris Indstria e

Sequoia Logstica e

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sequoia Logstica e has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak 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.

Aeris Indstria e

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Aeris Indstria e are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Aeris Indstria unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sequoia Logstica and Aeris Indstria

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

The idea behind Sequoia Logstica e and Aeris Indstria e 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.