Correlation Between GAEC Educacao and Bombril SA
Can any of the company-specific risk be diversified away by investing in both GAEC Educacao and Bombril SA 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 GAEC Educacao and Bombril SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GAEC Educacao SA and Bombril SA, you can compare the effects of market volatilities on GAEC Educacao and Bombril SA 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 GAEC Educacao with a short position of Bombril SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of GAEC Educacao and Bombril SA.
Diversification Opportunities for GAEC Educacao and Bombril SA
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GAEC and Bombril is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding GAEC Educacao SA and Bombril SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bombril SA and GAEC Educacao 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 GAEC Educacao SA are associated (or correlated) with Bombril SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bombril SA has no effect on the direction of GAEC Educacao i.e., GAEC Educacao and Bombril SA go up and down completely randomly.
Pair Corralation between GAEC Educacao and Bombril SA
Assuming the 90 days trading horizon GAEC Educacao SA is expected to under-perform the Bombril SA. In addition to that, GAEC Educacao is 1.93 times more volatile than Bombril SA. It trades about -0.07 of its total potential returns per unit of risk. Bombril SA is currently generating about 0.01 per unit of volatility. If you would invest 217.00 in Bombril SA on September 3, 2024 and sell it today you would earn a total of 0.00 from holding Bombril SA or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GAEC Educacao SA vs. Bombril SA
Performance |
| Timeline |
| GAEC Educacao SA |
| Bombril SA |
GAEC Educacao and Bombril SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GAEC Educacao and Bombril SA
The main advantage of trading using opposite GAEC Educacao and Bombril SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GAEC Educacao position performs unexpectedly, Bombril SA 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 Bombril SA will offset losses from the drop in Bombril SA's long position.| GAEC Educacao vs. Ser Educacional Sa | GAEC Educacao vs. Yduqs Participaes SA | GAEC Educacao vs. PBG SA | GAEC Educacao vs. Movida Participaes SA |
| Bombril SA vs. Eternit SA | Bombril SA vs. Lupatech SA | Bombril SA vs. Inepar SA Indstria | Bombril SA vs. Marcopolo SA |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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