Correlation Between CTEEP Companhia and BB Seguridade

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

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

Diversification Opportunities for CTEEP Companhia and BB Seguridade

0.6

Correlation Coefficient

CTEEP Companhia  BB Seguridade

Poor diversification

The 3 months correlation between CTEEP and BBSE3 is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding CTEEP Companhia and BB Seguridade Participacoes in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BB Seguridade Partic and CTEEP Companhia 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 CTEEP Companhia are associated (or correlated) with BB Seguridade. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BB Seguridade Partic has no effect on the direction of CTEEP Companhia i.e., CTEEP Companhia and BB Seguridade go up and down completely randomly.

Pair Corralation between CTEEP Companhia and BB Seguridade

Assuming the 90 days trading horizon CTEEP Companhia is expected to generate 1.3 times more return on investment than BB Seguridade. However, CTEEP Companhia is 1.3 times more volatile than BB Seguridade Participacoes. It trades about -0.03 of its potential returns per unit of risk. BB Seguridade Participacoes is currently generating about -0.17 per unit of risk. If you would invest  2,474  in CTEEP Companhia on September 2, 2024 and sell it today you would lose (58.00) from holding CTEEP Companhia or give up 2.34% of portfolio value over 90 days.

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

CTEEP Companhia  vs.  BB Seguridade Participacoes

CTEEP Companhia

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CTEEP Companhia has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, CTEEP Companhia is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

BB Seguridade Partic

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BB Seguridade Participacoes 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 CTEEP Companhia and BB Seguridade

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

The idea behind CTEEP Companhia and BB Seguridade Participacoes 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.