Correlation Between Boa Safra and Cia Brasileira

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

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

Diversification Opportunities for Boa Safra and Cia Brasileira

0.62

Correlation Coefficient

Boa Safra  Cia Brasileira

Poor diversification

The 3 months correlation between Boa and Cia is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Boa Safra Sementes 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 Boa Safra 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 Boa Safra Sementes 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 Boa Safra i.e., Boa Safra and Cia Brasileira go up and down completely randomly.

Pair Corralation between Boa Safra and Cia Brasileira

Assuming the 90 days trading horizon Boa Safra Sementes is expected to generate 0.66 times more return on investment than Cia Brasileira. However, Boa Safra Sementes is 1.51 times less risky than Cia Brasileira. It trades about 0.0 of its potential returns per unit of risk. Cia Brasileira de is currently generating about 0.0 per unit of risk. If you would invest  1,110  in Boa Safra Sementes on December 5, 2024 and sell it today you would lose (107.00) from holding Boa Safra Sementes or give up 9.64% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.8%
Values	Daily Returns

Boa Safra Sementes  vs.  Cia Brasileira de

Boa Safra Sementes

Risk-Adjusted Performance

Very Weak

Over the last 90 days Boa Safra Sementes has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Cia Brasileira de

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cia Brasileira de 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 April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Boa Safra and Cia Brasileira

The main advantage of trading using opposite Boa Safra and Cia Brasileira positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boa Safra 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 Boa Safra Sementes 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.