Correlation Between CM Hospitalar and Fica Empreendimentos

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

By analyzing existing cross correlation between CM Hospitalar SA and Fica Empreendimentos Imobiliarios, you can compare the effects of market volatilities on CM Hospitalar and Fica Empreendimentos 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 CM Hospitalar with a short position of Fica Empreendimentos. Check out your portfolio center. Please also check ongoing floating volatility patterns of CM Hospitalar and Fica Empreendimentos.

Diversification Opportunities for CM Hospitalar and Fica Empreendimentos

0.18

Correlation Coefficient

CM Hospitalar  Fica Empreendimentos

Average diversification

The 3 months correlation between VVEO3 and Fica is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding CM Hospitalar SA and Fica Empreendimentos Imobiliar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fica Empreendimentos and CM Hospitalar 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 CM Hospitalar SA are associated (or correlated) with Fica Empreendimentos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fica Empreendimentos has no effect on the direction of CM Hospitalar i.e., CM Hospitalar and Fica Empreendimentos go up and down completely randomly.

Pair Corralation between CM Hospitalar and Fica Empreendimentos

Assuming the 90 days trading horizon CM Hospitalar SA is expected to generate 1.25 times more return on investment than Fica Empreendimentos. However, CM Hospitalar is 1.25 times more volatile than Fica Empreendimentos Imobiliarios. It trades about 0.09 of its potential returns per unit of risk. Fica Empreendimentos Imobiliarios is currently generating about 0.01 per unit of risk. If you would invest  181.00  in CM Hospitalar SA on October 8, 2024 and sell it today you would earn a total of  40.00  from holding CM Hospitalar SA or generate 22.1% return on investment over 90 days.

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

CM Hospitalar SA  vs.  Fica Empreendimentos Imobiliar

CM Hospitalar SA

Risk-Adjusted Performance

7 of 100

Modest

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

Fica Empreendimentos

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with CM Hospitalar and Fica Empreendimentos

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

The idea behind CM Hospitalar SA and Fica Empreendimentos Imobiliarios 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.