Correlation Between T4F Entretenimento and Cambuci SA

Can any of the company-specific risk be diversified away by investing in both T4F Entretenimento and Cambuci 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 T4F Entretenimento and Cambuci SA into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between T4F Entretenimento SA and Cambuci SA, you can compare the effects of market volatilities on T4F Entretenimento and Cambuci 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 T4F Entretenimento with a short position of Cambuci SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of T4F Entretenimento and Cambuci SA.

Diversification Opportunities for T4F Entretenimento and Cambuci SA

0.16

Correlation Coefficient

T4F Entretenimento  Cambuci SA

Average diversification

The 3 months correlation between T4F and Cambuci is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding T4F Entretenimento SA and Cambuci SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cambuci SA and T4F Entretenimento 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 T4F Entretenimento SA are associated (or correlated) with Cambuci SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cambuci SA has no effect on the direction of T4F Entretenimento i.e., T4F Entretenimento and Cambuci SA go up and down completely randomly.

Pair Corralation between T4F Entretenimento and Cambuci SA

Assuming the 90 days trading horizon T4F Entretenimento SA is expected to generate 1.58 times more return on investment than Cambuci SA. However, T4F Entretenimento is 1.58 times more volatile than Cambuci SA. It trades about 0.02 of its potential returns per unit of risk. Cambuci SA is currently generating about 0.01 per unit of risk. If you would invest  67.00  in T4F Entretenimento SA on December 30, 2024 and sell it today you would earn a total of  1.00  from holding T4F Entretenimento SA or generate 1.49% return on investment over 90 days.

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

T4F Entretenimento SA  vs.  Cambuci SA

T4F Entretenimento

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in T4F Entretenimento SA are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, T4F Entretenimento is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Cambuci SA

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Cambuci SA are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Cambuci SA 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 T4F Entretenimento and Cambuci SA

The main advantage of trading using opposite T4F Entretenimento and Cambuci SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if T4F Entretenimento position performs unexpectedly, Cambuci 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 Cambuci SA will offset losses from the drop in Cambuci SA's long position.

The idea behind T4F Entretenimento SA and Cambuci 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.