Correlation Between Vasta Platform and Raphael Pharmaceutical

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

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

Diversification Opportunities for Vasta Platform and Raphael Pharmaceutical

0.04

Correlation Coefficient

Vasta Platform  Raphael Pharmaceutical

Significant diversification

The 3 months correlation between Vasta and Raphael is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Vasta Platform and Raphael Pharmaceutical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Raphael Pharmaceutical 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 Raphael Pharmaceutical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Raphael Pharmaceutical has no effect on the direction of Vasta Platform i.e., Vasta Platform and Raphael Pharmaceutical go up and down completely randomly.

Pair Corralation between Vasta Platform and Raphael Pharmaceutical

Given the investment horizon of 90 days Vasta Platform is expected to generate 41.95 times less return on investment than Raphael Pharmaceutical. But when comparing it to its historical volatility, Vasta Platform is 3.47 times less risky than Raphael Pharmaceutical. It trades about 0.02 of its potential returns per unit of risk. Raphael Pharmaceutical is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  26.00  in Raphael Pharmaceutical on October 26, 2024 and sell it today you would earn a total of  74.00  from holding Raphael Pharmaceutical or generate 284.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	93.65%
Values	Daily Returns

Vasta Platform  vs.  Raphael Pharmaceutical

Vasta Platform

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Vasta Platform are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

Raphael Pharmaceutical

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Raphael Pharmaceutical are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite fairly conflicting basic indicators, Raphael Pharmaceutical demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Vasta Platform and Raphael Pharmaceutical

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

The idea behind Vasta Platform and Raphael Pharmaceutical 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.