Correlation Between Fibra Terrafina and Fibra Danhos

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

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

Diversification Opportunities for Fibra Terrafina and Fibra Danhos

0.31

Correlation Coefficient

Fibra Terrafina  Fibra Danhos

Weak diversification

The 3 months correlation between Fibra and Fibra is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Fibra Terrafina and Fibra Danhos in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fibra Danhos and Fibra Terrafina 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 Fibra Terrafina are associated (or correlated) with Fibra Danhos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fibra Danhos has no effect on the direction of Fibra Terrafina i.e., Fibra Terrafina and Fibra Danhos go up and down completely randomly.

Pair Corralation between Fibra Terrafina and Fibra Danhos

Assuming the 90 days trading horizon Fibra Terrafina is expected to generate 1.3 times less return on investment than Fibra Danhos. In addition to that, Fibra Terrafina is 2.32 times more volatile than Fibra Danhos. It trades about 0.04 of its total potential returns per unit of risk. Fibra Danhos is currently generating about 0.13 per unit of volatility. If you would invest  2,065  in Fibra Danhos on October 26, 2024 and sell it today you would earn a total of  77.00  from holding Fibra Danhos or generate 3.73% return on investment over 90 days.

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

Fibra Terrafina  vs.  Fibra Danhos

Fibra Terrafina

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fibra Terrafina has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Fibra Terrafina is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Fibra Danhos

Risk-Adjusted Performance

5 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Fibra Danhos are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Fibra Danhos may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Fibra Terrafina and Fibra Danhos

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

The idea behind Fibra Terrafina and Fibra Danhos 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.