Correlation Between Vasta Platform and BRF SA

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

By analyzing existing cross correlation between Vasta Platform and BRF SA ADR, you can compare the effects of market volatilities on Vasta Platform and BRF SA 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 BRF SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vasta Platform and BRF SA.

Diversification Opportunities for Vasta Platform and BRF SA

-0.85

Correlation Coefficient

Vasta Platform  BRF SA

Pay attention - limited upside

The 3 months correlation between Vasta and BRF is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding Vasta Platform and BRF SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BRF SA ADR 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 BRF SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BRF SA ADR has no effect on the direction of Vasta Platform i.e., Vasta Platform and BRF SA go up and down completely randomly.

Pair Corralation between Vasta Platform and BRF SA

Given the investment horizon of 90 days Vasta Platform is expected to generate 1.45 times more return on investment than BRF SA. However, Vasta Platform is 1.45 times more volatile than BRF SA ADR. It trades about 0.23 of its potential returns per unit of risk. BRF SA ADR is currently generating about -0.13 per unit of risk. If you would invest  234.00  in Vasta Platform on December 26, 2024 and sell it today you would earn a total of  139.00  from holding Vasta Platform or generate 59.4% return on investment over 90 days.

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

Vasta Platform  vs.  BRF SA ADR

Vasta Platform

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Vasta Platform are ranked lower than 18 (%) 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.

BRF SA ADR

Risk-Adjusted Performance

Very Weak

Over the last 90 days BRF SA ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental 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.

Pair Trading with Vasta Platform and BRF SA

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

The idea behind Vasta Platform and BRF SA ADR 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.