Correlation Between Boa Safra and Jalles Machado

Can any of the company-specific risk be diversified away by investing in both Boa Safra and Jalles Machado 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 Jalles Machado 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 Jalles Machado SA, you can compare the effects of market volatilities on Boa Safra and Jalles Machado 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 Jalles Machado. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boa Safra and Jalles Machado.

Diversification Opportunities for Boa Safra and Jalles Machado

0.03

Correlation Coefficient

Boa Safra  Jalles Machado

Significant diversification

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

Pair Corralation between Boa Safra and Jalles Machado

Assuming the 90 days trading horizon Boa Safra Sementes is expected to generate 0.91 times more return on investment than Jalles Machado. However, Boa Safra Sementes is 1.1 times less risky than Jalles Machado. It trades about 0.04 of its potential returns per unit of risk. Jalles Machado SA is currently generating about -0.09 per unit of risk. If you would invest  1,028  in Boa Safra Sementes on December 23, 2024 and sell it today you would earn a total of  41.00  from holding Boa Safra Sementes or generate 3.99% return on investment over 90 days.

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

Boa Safra Sementes  vs.  Jalles Machado SA

Boa Safra Sementes

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Boa Safra Sementes are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Boa Safra is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Jalles Machado SA

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Boa Safra and Jalles Machado

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

The idea behind Boa Safra Sementes and Jalles Machado 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.