Correlation Between Companhia and Bahema Educao
Can any of the company-specific risk be diversified away by investing in both Companhia and Bahema Educao 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 Companhia and Bahema Educao into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Companhia de Fiacao and Bahema Educao SA, you can compare the effects of market volatilities on Companhia and Bahema Educao 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 Companhia with a short position of Bahema Educao. Check out your portfolio center. Please also check ongoing floating volatility patterns of Companhia and Bahema Educao.
Diversification Opportunities for Companhia and Bahema Educao
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Companhia and Bahema is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Companhia de Fiacao and Bahema Educao SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bahema Educao SA and Companhia 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 Companhia de Fiacao are associated (or correlated) with Bahema Educao. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bahema Educao SA has no effect on the direction of Companhia i.e., Companhia and Bahema Educao go up and down completely randomly.
Pair Corralation between Companhia and Bahema Educao
Assuming the 90 days trading horizon Companhia de Fiacao is expected to under-perform the Bahema Educao. But the stock apears to be less risky and, when comparing its historical volatility, Companhia de Fiacao is 1.8 times less risky than Bahema Educao. The stock trades about -0.28 of its potential returns per unit of risk. The Bahema Educao SA is currently generating about -0.11 of returns per unit of risk over similar time horizon. If you would invest 439.00 in Bahema Educao SA on November 1, 2024 and sell it today you would lose (41.00) from holding Bahema Educao SA or give up 9.34% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.0% |
| Values | Daily Returns |
Companhia de Fiacao vs. Bahema Educao SA
Performance |
| Timeline |
| Companhia de Fiacao |
| Bahema Educao SA |
Companhia and Bahema Educao Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Companhia and Bahema Educao
The main advantage of trading using opposite Companhia and Bahema Educao positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Companhia position performs unexpectedly, Bahema Educao 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 Bahema Educao will offset losses from the drop in Bahema Educao's long position.| Companhia vs. Pentair plc | Companhia vs. Westinghouse Air Brake | Companhia vs. Marfrig Global Foods | Companhia vs. Monster Beverage |
| Bahema Educao vs. Biomm SA | Bahema Educao vs. GAEC Educacao SA | Bahema Educao vs. T4F Entretenimento SA | Bahema Educao vs. Ser Educacional 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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