Correlation Between FREEPORT and Vasta Platform

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

By analyzing existing cross correlation between FREEPORT MCMORAN INC 525 and Vasta Platform, you can compare the effects of market volatilities on FREEPORT and Vasta Platform 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 FREEPORT with a short position of Vasta Platform. Check out your portfolio center. Please also check ongoing floating volatility patterns of FREEPORT and Vasta Platform.

Diversification Opportunities for FREEPORT and Vasta Platform

-0.22

Correlation Coefficient

FREEPORT  Vasta Platform

Very good diversification

The 3 months correlation between FREEPORT and Vasta is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding FREEPORT MCMORAN INC 525 and Vasta Platform in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vasta Platform and FREEPORT 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 FREEPORT MCMORAN INC 525 are associated (or correlated) with Vasta Platform. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vasta Platform has no effect on the direction of FREEPORT i.e., FREEPORT and Vasta Platform go up and down completely randomly.

Pair Corralation between FREEPORT and Vasta Platform

Assuming the 90 days trading horizon FREEPORT MCMORAN INC 525 is expected to generate 0.11 times more return on investment than Vasta Platform. However, FREEPORT MCMORAN INC 525 is 9.47 times less risky than Vasta Platform. It trades about -0.07 of its potential returns per unit of risk. Vasta Platform is currently generating about -0.02 per unit of risk. If you would invest  10,112  in FREEPORT MCMORAN INC 525 on October 10, 2024 and sell it today you would lose (162.00) from holding FREEPORT MCMORAN INC 525 or give up 1.6% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

FREEPORT MCMORAN INC 525  vs.  Vasta Platform

FREEPORT MCMORAN INC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FREEPORT MCMORAN INC 525 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, FREEPORT is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Vasta Platform

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with FREEPORT and Vasta Platform

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

The idea behind FREEPORT MCMORAN INC 525 and Vasta Platform 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.