Correlation Between Smartfit Escola and Cia Brasileira

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

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

Diversification Opportunities for Smartfit Escola and Cia Brasileira

-0.55

Correlation Coefficient

Smartfit Escola  Cia Brasileira

Excellent diversification

The 3 months correlation between Smartfit and Cia is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Smartfit Escola de and Cia Brasileira de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cia Brasileira de and Smartfit Escola 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 Smartfit Escola de are associated (or correlated) with Cia Brasileira. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cia Brasileira de has no effect on the direction of Smartfit Escola i.e., Smartfit Escola and Cia Brasileira go up and down completely randomly.

Pair Corralation between Smartfit Escola and Cia Brasileira

Assuming the 90 days trading horizon Smartfit Escola de is expected to under-perform the Cia Brasileira. But the stock apears to be less risky and, when comparing its historical volatility, Smartfit Escola de is 1.3 times less risky than Cia Brasileira. The stock trades about -0.05 of its potential returns per unit of risk. The Cia Brasileira de is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  536.00  in Cia Brasileira de on September 17, 2024 and sell it today you would earn a total of  54.00  from holding Cia Brasileira de or generate 10.07% return on investment over 90 days.

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

Smartfit Escola de  vs.  Cia Brasileira de

Smartfit Escola de

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Smartfit Escola 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.

Cia Brasileira de

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Cia Brasileira de are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Cia Brasileira unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Smartfit Escola and Cia Brasileira

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

The idea behind Smartfit Escola de and Cia Brasileira 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.