Correlation Between SIMPAR SA and Pet Center

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

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

Diversification Opportunities for SIMPAR SA and Pet Center

0.03

Correlation Coefficient

SIMPAR SA  Pet Center

Significant diversification

The 3 months correlation between SIMPAR and Pet is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding SIMPAR SA and Pet Center Comrcio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pet Center Comrcio and SIMPAR SA 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 SIMPAR SA are associated (or correlated) with Pet Center. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pet Center Comrcio has no effect on the direction of SIMPAR SA i.e., SIMPAR SA and Pet Center go up and down completely randomly.

Pair Corralation between SIMPAR SA and Pet Center

Assuming the 90 days trading horizon SIMPAR SA is expected to generate 1.56 times more return on investment than Pet Center. However, SIMPAR SA is 1.56 times more volatile than Pet Center Comrcio. It trades about 0.11 of its potential returns per unit of risk. Pet Center Comrcio is currently generating about 0.02 per unit of risk. If you would invest  351.00  in SIMPAR SA on December 30, 2024 and sell it today you would earn a total of  86.00  from holding SIMPAR SA or generate 24.5% return on investment over 90 days.

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

SIMPAR SA  vs.  Pet Center Comrcio

SIMPAR SA

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SIMPAR SA are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, SIMPAR SA unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pet Center Comrcio

Risk-Adjusted Performance

Weak

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

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

The idea behind SIMPAR SA and Pet Center Comrcio 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.