Correlation Between Vasta Platform and Alico

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

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

Diversification Opportunities for Vasta Platform and Alico

0.15

Correlation Coefficient

Vasta Platform  Alico

Average diversification

The 3 months correlation between Vasta and Alico is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Vasta Platform and Alico Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alico Inc and Vasta Platform 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 Vasta Platform are associated (or correlated) with Alico. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alico Inc has no effect on the direction of Vasta Platform i.e., Vasta Platform and Alico go up and down completely randomly.

Pair Corralation between Vasta Platform and Alico

Given the investment horizon of 90 days Vasta Platform is expected to generate 1.15 times more return on investment than Alico. However, Vasta Platform is 1.15 times more volatile than Alico Inc. It trades about 0.35 of its potential returns per unit of risk. Alico Inc is currently generating about 0.1 per unit of risk. If you would invest  216.00  in Vasta Platform on December 28, 2024 and sell it today you would earn a total of  219.00  from holding Vasta Platform or generate 101.39% return on investment over 90 days.

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

Vasta Platform  vs.  Alico Inc

Vasta Platform

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Vasta Platform are ranked lower than 27 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Vasta Platform sustained solid returns over the last few months and may actually be approaching a breakup point.

Alico Inc

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Alico Inc are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very weak fundamental indicators, Alico displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Vasta Platform and Alico

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

The idea behind Vasta Platform and Alico Inc 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.