Correlation Between Vasta Platform and TKO Group

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

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

Diversification Opportunities for Vasta Platform and TKO Group

0.37

Correlation Coefficient

Vasta Platform  TKO Group

Weak diversification

The 3 months correlation between Vasta and TKO is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Vasta Platform and TKO Group Holdings, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TKO Group Holdings, 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 TKO Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TKO Group Holdings, has no effect on the direction of Vasta Platform i.e., Vasta Platform and TKO Group go up and down completely randomly.

Pair Corralation between Vasta Platform and TKO Group

Given the investment horizon of 90 days Vasta Platform is expected to generate 1.79 times more return on investment than TKO Group. However, Vasta Platform is 1.79 times more volatile than TKO Group Holdings,. It trades about 0.29 of its potential returns per unit of risk. TKO Group Holdings, is currently generating about 0.03 per unit of risk. If you would invest  192.00  in Vasta Platform on December 18, 2024 and sell it today you would earn a total of  162.00  from holding Vasta Platform or generate 84.38% return on investment over 90 days.

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

Vasta Platform  vs.  TKO Group Holdings,

Vasta Platform

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Vasta Platform are ranked lower than 22 (%) 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.

TKO Group Holdings,

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in TKO Group Holdings, are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy forward-looking signals, TKO Group is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Vasta Platform and TKO Group

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

The idea behind Vasta Platform and TKO Group Holdings, 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 Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.