Correlation Between Bombril SA and Companhia Tecidos
Can any of the company-specific risk be diversified away by investing in both Bombril SA and Companhia Tecidos 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 Companhia Tecidos into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bombril SA and Companhia Tecidos Santanense, you can compare the effects of market volatilities on Bombril SA and Companhia Tecidos 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 Companhia Tecidos. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bombril SA and Companhia Tecidos.
Diversification Opportunities for Bombril SA and Companhia Tecidos
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bombril and Companhia is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Bombril SA and Companhia Tecidos Santanense in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Companhia Tecidos 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 Companhia Tecidos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Companhia Tecidos has no effect on the direction of Bombril SA i.e., Bombril SA and Companhia Tecidos go up and down completely randomly.
Pair Corralation between Bombril SA and Companhia Tecidos
Assuming the 90 days trading horizon Bombril SA is expected to generate 1.36 times less return on investment than Companhia Tecidos. But when comparing it to its historical volatility, Bombril SA is 3.55 times less risky than Companhia Tecidos. It trades about 0.06 of its potential returns per unit of risk. Companhia Tecidos Santanense is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 268.00 in Companhia Tecidos Santanense on September 5, 2024 and sell it today you would lose (97.00) from holding Companhia Tecidos Santanense or give up 36.19% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bombril SA vs. Companhia Tecidos Santanense
Performance |
| Timeline |
| Bombril SA |
| Companhia Tecidos |
Bombril SA and Companhia Tecidos Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bombril SA and Companhia Tecidos
The main advantage of trading using opposite Bombril SA and Companhia Tecidos positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bombril SA position performs unexpectedly, Companhia Tecidos 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 Companhia Tecidos will offset losses from the drop in Companhia Tecidos' long position.| Bombril SA vs. Minupar Participaes SA | Bombril SA vs. Grazziotin SA | Bombril SA vs. Banco da Amaznia | Bombril SA vs. Grazziotin SA |
| Companhia Tecidos vs. Engie Brasil Energia | Companhia Tecidos vs. Grendene SA | Companhia Tecidos vs. M Dias Branco |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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