Correlation Between Tupy SA and Itasa Investimentos

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

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

Diversification Opportunities for Tupy SA and Itasa Investimentos

-0.59

Correlation Coefficient

Tupy SA  Itasa Investimentos

Excellent diversification

The 3 months correlation between Tupy and Itasa is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Tupy SA and Itasa Investimentos in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Itasa Investimentos and Tupy 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 Tupy SA are associated (or correlated) with Itasa Investimentos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Itasa Investimentos has no effect on the direction of Tupy SA i.e., Tupy SA and Itasa Investimentos go up and down completely randomly.

Pair Corralation between Tupy SA and Itasa Investimentos

Assuming the 90 days trading horizon Tupy SA is expected to under-perform the Itasa Investimentos. In addition to that, Tupy SA is 1.4 times more volatile than Itasa Investimentos. It trades about -0.2 of its total potential returns per unit of risk. Itasa Investimentos is currently generating about 0.11 per unit of volatility. If you would invest  869.00  in Itasa Investimentos on December 30, 2024 and sell it today you would earn a total of  93.00  from holding Itasa Investimentos or generate 10.7% return on investment over 90 days.

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

Tupy SA  vs.  Itasa Investimentos

Tupy SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Tupy SA 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.

Itasa Investimentos

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Itasa Investimentos are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Itasa Investimentos may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Tupy SA and Itasa Investimentos

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

The idea behind Tupy SA and Itasa Investimentos 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.

Check out your portfolio center.

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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.