Correlation Between Suzano SA and Aeris Indstria

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

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

Diversification Opportunities for Suzano SA and Aeris Indstria

0.83

Correlation Coefficient

Suzano SA  Aeris Indstria

Very poor diversification

The 3 months correlation between Suzano and Aeris is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Suzano SA and Aeris Indstria e in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aeris Indstria e and Suzano 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 Suzano SA are associated (or correlated) with Aeris Indstria. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aeris Indstria e has no effect on the direction of Suzano SA i.e., Suzano SA and Aeris Indstria go up and down completely randomly.

Pair Corralation between Suzano SA and Aeris Indstria

Assuming the 90 days trading horizon Suzano SA is expected to generate 0.2 times more return on investment than Aeris Indstria. However, Suzano SA is 4.91 times less risky than Aeris Indstria. It trades about -0.2 of its potential returns per unit of risk. Aeris Indstria e is currently generating about -0.08 per unit of risk. If you would invest  6,178  in Suzano SA on December 30, 2024 and sell it today you would lose (858.00) from holding Suzano SA or give up 13.89% of portfolio value over 90 days.

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

Suzano SA  vs.  Aeris Indstria e

Suzano SA

Risk-Adjusted Performance

Very Weak

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

Aeris Indstria e

Risk-Adjusted Performance

Very Weak

Over the last 90 days Aeris Indstria e 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 Suzano SA and Aeris Indstria

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

The idea behind Suzano SA and Aeris Indstria e 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.