Correlation Between Tupy SA and Plascar Participaes

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

By analyzing existing cross correlation between Tupy SA and Plascar Participaes Industriais, you can compare the effects of market volatilities on Tupy SA and Plascar Participaes 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 Plascar Participaes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tupy SA and Plascar Participaes.

Diversification Opportunities for Tupy SA and Plascar Participaes

-0.34

Correlation Coefficient

Tupy SA  Plascar Participaes

Very good diversification

The 3 months correlation between Tupy and Plascar is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Tupy SA and Plascar Participaes Industriai in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Plascar Participaes 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 Plascar Participaes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Plascar Participaes has no effect on the direction of Tupy SA i.e., Tupy SA and Plascar Participaes go up and down completely randomly.

Pair Corralation between Tupy SA and Plascar Participaes

Assuming the 90 days trading horizon Tupy SA is expected to under-perform the Plascar Participaes. But the stock apears to be less risky and, when comparing its historical volatility, Tupy SA is 1.98 times less risky than Plascar Participaes. The stock trades about -0.08 of its potential returns per unit of risk. The Plascar Participaes Industriais is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  575.00  in Plascar Participaes Industriais on December 22, 2024 and sell it today you would earn a total of  37.00  from holding Plascar Participaes Industriais or generate 6.43% return on investment over 90 days.

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

Tupy SA  vs.  Plascar Participaes Industriai

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 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.

Plascar Participaes

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Plascar Participaes Industriais are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Plascar Participaes unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Tupy SA and Plascar Participaes

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

The idea behind Tupy SA and Plascar Participaes Industriais 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.