Correlation Between Vasta Platform and Four Seasons

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

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

Diversification Opportunities for Vasta Platform and Four Seasons

-0.43

Correlation Coefficient

Vasta Platform  Four Seasons

Very good diversification

The 3 months correlation between Vasta and Four is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Vasta Platform and Four Seasons Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Four Seasons Education 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 Four Seasons. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Four Seasons Education has no effect on the direction of Vasta Platform i.e., Vasta Platform and Four Seasons go up and down completely randomly.

Pair Corralation between Vasta Platform and Four Seasons

Given the investment horizon of 90 days Vasta Platform is expected to generate 1.17 times more return on investment than Four Seasons. However, Vasta Platform is 1.17 times more volatile than Four Seasons Education. It trades about 0.07 of its potential returns per unit of risk. Four Seasons Education is currently generating about 0.0 per unit of risk. If you would invest  251.00  in Vasta Platform on November 28, 2024 and sell it today you would earn a total of  34.00  from holding Vasta Platform or generate 13.55% return on investment over 90 days.

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

Vasta Platform  vs.  Four Seasons Education

Vasta Platform

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Vasta Platform are ranked lower than 5 (%) 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.

Four Seasons Education

Risk-Adjusted Performance

Very Weak

Over the last 90 days Four Seasons Education has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental indicators, Four Seasons is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Vasta Platform and Four Seasons

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

The idea behind Vasta Platform and Four Seasons Education 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.