Correlation Between Zenvia and Santo Mining

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

By analyzing existing cross correlation between Zenvia Inc and Santo Mining Corp, you can compare the effects of market volatilities on Zenvia and Santo Mining 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 Zenvia with a short position of Santo Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zenvia and Santo Mining.

Diversification Opportunities for Zenvia and Santo Mining

0.0

Correlation Coefficient

Zenvia  Santo Mining

Pay attention - limited upside

The 3 months correlation between Zenvia and Santo is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Zenvia Inc and Santo Mining Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Santo Mining Corp and Zenvia 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 Zenvia Inc are associated (or correlated) with Santo Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Santo Mining Corp has no effect on the direction of Zenvia i.e., Zenvia and Santo Mining go up and down completely randomly.

Pair Corralation between Zenvia and Santo Mining

Given the investment horizon of 90 days Zenvia is expected to generate 39.86 times less return on investment than Santo Mining. But when comparing it to its historical volatility, Zenvia Inc is 17.38 times less risky than Santo Mining. It trades about 0.05 of its potential returns per unit of risk. Santo Mining Corp is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  0.03  in Santo Mining Corp on October 11, 2024 and sell it today you would lose (0.03) from holding Santo Mining Corp or give up 100.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	87.68%
Values	Daily Returns

Zenvia Inc  vs.  Santo Mining Corp

Zenvia Inc

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Zenvia Inc are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Zenvia showed solid returns over the last few months and may actually be approaching a breakup point.

Santo Mining Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Santo Mining Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Santo Mining is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Zenvia and Santo Mining

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

The idea behind Zenvia Inc and Santo Mining Corp 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.