Correlation Between Santos Brasil and HAGA SA

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

By analyzing existing cross correlation between Santos Brasil Participaes and HAGA SA Indstria, you can compare the effects of market volatilities on Santos Brasil and HAGA SA 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 Santos Brasil with a short position of HAGA SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Santos Brasil and HAGA SA.

Diversification Opportunities for Santos Brasil and HAGA SA

-0.36

Correlation Coefficient

Santos Brasil  HAGA SA

Very good diversification

The 3 months correlation between Santos and HAGA is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Santos Brasil Participaes and HAGA SA Indstria in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HAGA SA Indstria and Santos Brasil 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 Santos Brasil Participaes are associated (or correlated) with HAGA SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HAGA SA Indstria has no effect on the direction of Santos Brasil i.e., Santos Brasil and HAGA SA go up and down completely randomly.

Pair Corralation between Santos Brasil and HAGA SA

Assuming the 90 days trading horizon Santos Brasil is expected to generate 1.61 times less return on investment than HAGA SA. But when comparing it to its historical volatility, Santos Brasil Participaes is 7.37 times less risky than HAGA SA. It trades about 0.09 of its potential returns per unit of risk. HAGA SA Indstria is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  116.00  in HAGA SA Indstria on December 2, 2024 and sell it today you would earn a total of  1.00  from holding HAGA SA Indstria or generate 0.86% return on investment over 90 days.

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

Santos Brasil Participaes  vs.  HAGA SA Indstria

Santos Brasil Participaes

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Santos Brasil Participaes are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Santos Brasil is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

HAGA SA Indstria

Risk-Adjusted Performance

Very Weak

Over the last 90 days HAGA SA Indstria has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, HAGA SA 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 Santos Brasil and HAGA SA

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

The idea behind Santos Brasil Participaes and HAGA SA Indstria 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.