Correlation Between Bombril SA and GAEC Educacao
Can any of the company-specific risk be diversified away by investing in both Bombril SA and GAEC Educacao 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 Bombril SA and GAEC Educacao into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bombril SA and GAEC Educacao SA, you can compare the effects of market volatilities on Bombril SA and GAEC Educacao 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 Bombril SA with a short position of GAEC Educacao. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bombril SA and GAEC Educacao.
Diversification Opportunities for Bombril SA and GAEC Educacao
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bombril and GAEC is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Bombril SA and GAEC Educacao SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GAEC Educacao SA and Bombril SA 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 Bombril SA are associated (or correlated) with GAEC Educacao. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GAEC Educacao SA has no effect on the direction of Bombril SA i.e., Bombril SA and GAEC Educacao go up and down completely randomly.
Pair Corralation between Bombril SA and GAEC Educacao
Assuming the 90 days trading horizon Bombril SA is expected to under-perform the GAEC Educacao. But the preferred stock apears to be less risky and, when comparing its historical volatility, Bombril SA is 2.05 times less risky than GAEC Educacao. The preferred stock trades about -0.39 of its potential returns per unit of risk. The GAEC Educacao SA is currently generating about -0.13 of returns per unit of risk over similar time horizon. If you would invest 255.00 in GAEC Educacao SA on September 1, 2024 and sell it today you would lose (41.00) from holding GAEC Educacao SA or give up 16.08% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bombril SA vs. GAEC Educacao SA
Performance |
| Timeline |
| Bombril SA |
| GAEC Educacao SA |
Bombril SA and GAEC Educacao Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bombril SA and GAEC Educacao
The main advantage of trading using opposite Bombril SA and GAEC Educacao positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bombril SA position performs unexpectedly, GAEC Educacao 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 GAEC Educacao will offset losses from the drop in GAEC Educacao's long position.| Bombril SA vs. Eternit SA | Bombril SA vs. Lupatech SA | Bombril SA vs. Inepar SA Indstria | Bombril SA vs. Marcopolo SA |
| GAEC Educacao vs. Ser Educacional Sa | GAEC Educacao vs. Yduqs Participaes SA | GAEC Educacao vs. PBG SA | GAEC Educacao vs. Movida Participaes 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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