Correlation Between Companhia Tecidos and Bombril SA
Can any of the company-specific risk be diversified away by investing in both Companhia Tecidos and Bombril 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 Companhia Tecidos and Bombril SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Companhia Tecidos Santanense and Bombril SA, you can compare the effects of market volatilities on Companhia Tecidos and Bombril 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 Companhia Tecidos with a short position of Bombril SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Companhia Tecidos and Bombril SA.
Diversification Opportunities for Companhia Tecidos and Bombril SA
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Companhia and Bombril is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Companhia Tecidos Santanense and Bombril SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bombril SA and Companhia Tecidos 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 Tecidos Santanense are associated (or correlated) with Bombril SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bombril SA has no effect on the direction of Companhia Tecidos i.e., Companhia Tecidos and Bombril SA go up and down completely randomly.
Pair Corralation between Companhia Tecidos and Bombril SA
Assuming the 90 days trading horizon Companhia Tecidos Santanense is expected to generate 3.55 times more return on investment than Bombril SA. However, Companhia Tecidos is 3.55 times more volatile than Bombril SA. It trades about 0.02 of its potential returns per unit of risk. Bombril SA is currently generating about 0.06 per unit of risk. 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 |
Companhia Tecidos Santanense vs. Bombril SA
Performance |
| Timeline |
| Companhia Tecidos |
| Bombril SA |
Companhia Tecidos and Bombril SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Companhia Tecidos and Bombril SA
The main advantage of trading using opposite Companhia Tecidos and Bombril SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Companhia Tecidos position performs unexpectedly, Bombril 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 Bombril SA will offset losses from the drop in Bombril SA's long position.| Companhia Tecidos vs. Engie Brasil Energia | Companhia Tecidos vs. Grendene SA | Companhia Tecidos vs. M Dias Branco |
| Bombril SA vs. Minupar Participaes SA | Bombril SA vs. Grazziotin SA | Bombril SA vs. Banco da Amaznia | Bombril SA vs. Grazziotin 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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