Correlation Between CA Modas and Schulz SA
Can any of the company-specific risk be diversified away by investing in both CA Modas and Schulz 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 CA Modas and Schulz SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CA Modas SA and Schulz SA, you can compare the effects of market volatilities on CA Modas and Schulz 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 CA Modas with a short position of Schulz SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of CA Modas and Schulz SA.
Diversification Opportunities for CA Modas and Schulz SA
Very good diversification
The 3 months correlation between CEAB3 and Schulz is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding CA Modas SA and Schulz SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Schulz SA and CA Modas 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 CA Modas SA are associated (or correlated) with Schulz SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Schulz SA has no effect on the direction of CA Modas i.e., CA Modas and Schulz SA go up and down completely randomly.
Pair Corralation between CA Modas and Schulz SA
Assuming the 90 days trading horizon CA Modas SA is expected to under-perform the Schulz SA. In addition to that, CA Modas is 3.18 times more volatile than Schulz SA. It trades about -0.15 of its total potential returns per unit of risk. Schulz SA is currently generating about -0.27 per unit of volatility. If you would invest 614.00 in Schulz SA on September 2, 2024 and sell it today you would lose (54.00) from holding Schulz SA or give up 8.79% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CA Modas SA vs. Schulz SA
Performance |
| Timeline |
| CA Modas SA |
| Schulz SA |
CA Modas and Schulz SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CA Modas and Schulz SA
The main advantage of trading using opposite CA Modas and Schulz SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CA Modas position performs unexpectedly, Schulz 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 Schulz SA will offset losses from the drop in Schulz SA's long position.| CA Modas vs. Marisa Lojas SA | CA Modas vs. Vivara Participaes SA | CA Modas vs. Guararapes Confeces SA | CA Modas vs. Atacado SA |
| Schulz SA vs. Fras le SA | Schulz SA vs. PBG SA | Schulz SA vs. Springs Global Participaes | Schulz SA vs. Indstrias Romi 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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