Correlation Between Bahema Educao and WEG SA
Can any of the company-specific risk be diversified away by investing in both Bahema Educao and WEG 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 Bahema Educao and WEG SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bahema Educao SA and WEG SA, you can compare the effects of market volatilities on Bahema Educao and WEG 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 Bahema Educao with a short position of WEG SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bahema Educao and WEG SA.
Diversification Opportunities for Bahema Educao and WEG SA
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bahema and WEG is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Bahema Educao SA and WEG SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WEG SA and Bahema Educao 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 Bahema Educao SA are associated (or correlated) with WEG SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WEG SA has no effect on the direction of Bahema Educao i.e., Bahema Educao and WEG SA go up and down completely randomly.
Pair Corralation between Bahema Educao and WEG SA
Assuming the 90 days trading horizon Bahema Educao SA is expected to under-perform the WEG SA. In addition to that, Bahema Educao is 2.99 times more volatile than WEG SA. It trades about -0.02 of its total potential returns per unit of risk. WEG SA is currently generating about 0.06 per unit of volatility. If you would invest 3,769 in WEG SA on September 12, 2024 and sell it today you would earn a total of 1,919 from holding WEG SA or generate 50.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bahema Educao SA vs. WEG SA
Performance |
| Timeline |
| Bahema Educao SA |
| WEG SA |
Bahema Educao and WEG SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bahema Educao and WEG SA
The main advantage of trading using opposite Bahema Educao and WEG SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bahema Educao position performs unexpectedly, WEG 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 WEG SA will offset losses from the drop in WEG SA's long position.| Bahema Educao vs. Biomm SA | Bahema Educao vs. GAEC Educacao SA | Bahema Educao vs. T4F Entretenimento SA | Bahema Educao vs. Ser Educacional 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 Transaction History module to view history of all your transactions and understand their impact on performance.
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