Correlation Between Banco Bradesco and Technos SA
Can any of the company-specific risk be diversified away by investing in both Banco Bradesco and Technos 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 Banco Bradesco and Technos SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Banco Bradesco SA and Technos SA, you can compare the effects of market volatilities on Banco Bradesco and Technos 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 Banco Bradesco with a short position of Technos SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banco Bradesco and Technos SA.
Diversification Opportunities for Banco Bradesco and Technos SA
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Banco and Technos is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Banco Bradesco SA and Technos SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Technos SA and Banco Bradesco 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 Banco Bradesco SA are associated (or correlated) with Technos SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Technos SA has no effect on the direction of Banco Bradesco i.e., Banco Bradesco and Technos SA go up and down completely randomly.
Pair Corralation between Banco Bradesco and Technos SA
Assuming the 90 days trading horizon Banco Bradesco SA is expected to under-perform the Technos SA. But the stock apears to be less risky and, when comparing its historical volatility, Banco Bradesco SA is 3.07 times less risky than Technos SA. The stock trades about -0.2 of its potential returns per unit of risk. The Technos SA is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 547.00 in Technos SA on September 12, 2024 and sell it today you would earn a total of 34.00 from holding Technos SA or generate 6.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Banco Bradesco SA vs. Technos SA
Performance |
| Timeline |
| Banco Bradesco SA |
| Technos SA |
Banco Bradesco and Technos SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Banco Bradesco and Technos SA
The main advantage of trading using opposite Banco Bradesco and Technos SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banco Bradesco position performs unexpectedly, Technos 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 Technos SA will offset losses from the drop in Technos SA's long position.| Banco Bradesco vs. Technos SA | Banco Bradesco vs. Zoom Video Communications | Banco Bradesco vs. CVS Health | Banco Bradesco vs. Unity Software |
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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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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