Correlation Between Unipar Carbocloro and IRB Brasil

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

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

Diversification Opportunities for Unipar Carbocloro and IRB Brasil

-0.09

Correlation Coefficient

Unipar Carbocloro  IRB Brasil

Good diversification

The 3 months correlation between Unipar and IRB is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Unipar Carbocloro SA and IRB Brasil Resseguros SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IRB Brasil Resseguros and Unipar Carbocloro 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 Unipar Carbocloro SA are associated (or correlated) with IRB Brasil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IRB Brasil Resseguros has no effect on the direction of Unipar Carbocloro i.e., Unipar Carbocloro and IRB Brasil go up and down completely randomly.

Pair Corralation between Unipar Carbocloro and IRB Brasil

Assuming the 90 days trading horizon Unipar Carbocloro is expected to generate 2.26 times less return on investment than IRB Brasil. But when comparing it to its historical volatility, Unipar Carbocloro SA is 1.39 times less risky than IRB Brasil. It trades about 0.07 of its potential returns per unit of risk. IRB Brasil Resseguros SA is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  4,245  in IRB Brasil Resseguros SA on December 30, 2024 and sell it today you would earn a total of  976.00  from holding IRB Brasil Resseguros SA or generate 22.99% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Unipar Carbocloro SA  vs.  IRB Brasil Resseguros SA

Unipar Carbocloro

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Unipar Carbocloro SA are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Unipar Carbocloro may actually be approaching a critical reversion point that can send shares even higher in April 2025.

IRB Brasil Resseguros

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in IRB Brasil Resseguros SA are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, IRB Brasil unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Unipar Carbocloro and IRB Brasil

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

The idea behind Unipar Carbocloro SA and IRB Brasil Resseguros SA 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.