Correlation Between SIMPAR SA and Vamos Locao

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

By analyzing existing cross correlation between SIMPAR SA and Vamos Locao de, you can compare the effects of market volatilities on SIMPAR SA and Vamos Locao 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 Vamos Locao. Check out your portfolio center. Please also check ongoing floating volatility patterns of SIMPAR SA and Vamos Locao.

Diversification Opportunities for SIMPAR SA and Vamos Locao

0.64

Correlation Coefficient

SIMPAR SA  Vamos Locao

Poor diversification

The 3 months correlation between SIMPAR and Vamos is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding SIMPAR SA and Vamos Locao de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vamos Locao de 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 Vamos Locao. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vamos Locao de has no effect on the direction of SIMPAR SA i.e., SIMPAR SA and Vamos Locao go up and down completely randomly.

Pair Corralation between SIMPAR SA and Vamos Locao

Assuming the 90 days trading horizon SIMPAR SA is expected to under-perform the Vamos Locao. In addition to that, SIMPAR SA is 1.07 times more volatile than Vamos Locao de. It trades about -0.19 of its total potential returns per unit of risk. Vamos Locao de is currently generating about -0.07 per unit of volatility. If you would invest  701.00  in Vamos Locao de on September 14, 2024 and sell it today you would lose (111.00) from holding Vamos Locao de or give up 15.83% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.41%
Values	Daily Returns

SIMPAR SA  vs.  Vamos Locao de

SIMPAR SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SIMPAR SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain 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.

Vamos Locao de

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vamos Locao de 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.

Pair Trading with SIMPAR SA and Vamos Locao

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

The idea behind SIMPAR SA and Vamos Locao 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.