Correlation Between BRF SA and Camil Alimentos
Can any of the company-specific risk be diversified away by investing in both BRF SA and Camil Alimentos 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 BRF SA and Camil Alimentos into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BRF SA and Camil Alimentos SA, you can compare the effects of market volatilities on BRF SA and Camil Alimentos 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 BRF SA with a short position of Camil Alimentos. Check out your portfolio center. Please also check ongoing floating volatility patterns of BRF SA and Camil Alimentos.
Diversification Opportunities for BRF SA and Camil Alimentos
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between BRF and Camil is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding BRF SA and Camil Alimentos SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Camil Alimentos SA and BRF 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 BRF SA are associated (or correlated) with Camil Alimentos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Camil Alimentos SA has no effect on the direction of BRF SA i.e., BRF SA and Camil Alimentos go up and down completely randomly.
Pair Corralation between BRF SA and Camil Alimentos
Assuming the 90 days trading horizon BRF SA is expected to generate 1.31 times more return on investment than Camil Alimentos. However, BRF SA is 1.31 times more volatile than Camil Alimentos SA. It trades about 0.09 of its potential returns per unit of risk. Camil Alimentos SA is currently generating about 0.01 per unit of risk. If you would invest 810.00 in BRF SA on August 25, 2024 and sell it today you would earn a total of 1,711 from holding BRF SA or generate 211.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
BRF SA vs. Camil Alimentos SA
Performance |
| Timeline |
| BRF SA |
| Camil Alimentos SA |
BRF SA and Camil Alimentos Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BRF SA and Camil Alimentos
The main advantage of trading using opposite BRF SA and Camil Alimentos positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BRF SA position performs unexpectedly, Camil Alimentos 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 Camil Alimentos will offset losses from the drop in Camil Alimentos' long position.The idea behind BRF SA and Camil Alimentos SA pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Camil Alimentos vs. SLC Agrcola SA | Camil Alimentos vs. Movida Participaes SA | Camil Alimentos vs. Indstrias Romi SA | Camil Alimentos 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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