Correlation Between Companhia Tecidos and Pettenati
Can any of the company-specific risk be diversified away by investing in both Companhia Tecidos and Pettenati 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 Pettenati 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 Pettenati SA Industria, you can compare the effects of market volatilities on Companhia Tecidos and Pettenati 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 Pettenati. Check out your portfolio center. Please also check ongoing floating volatility patterns of Companhia Tecidos and Pettenati.
Diversification Opportunities for Companhia Tecidos and Pettenati
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Companhia and Pettenati is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Companhia Tecidos Santanense and Pettenati SA Industria in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pettenati SA Industria 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 Pettenati. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pettenati SA Industria has no effect on the direction of Companhia Tecidos i.e., Companhia Tecidos and Pettenati go up and down completely randomly.
Pair Corralation between Companhia Tecidos and Pettenati
Assuming the 90 days trading horizon Companhia Tecidos Santanense is expected to generate 4.45 times more return on investment than Pettenati. However, Companhia Tecidos is 4.45 times more volatile than Pettenati SA Industria. It trades about 0.02 of its potential returns per unit of risk. Pettenati SA Industria is currently generating about 0.02 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 Together |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Companhia Tecidos Santanense vs. Pettenati SA Industria
Performance |
| Timeline |
| Companhia Tecidos |
| Pettenati SA Industria |
Companhia Tecidos and Pettenati Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Companhia Tecidos and Pettenati
The main advantage of trading using opposite Companhia Tecidos and Pettenati positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Companhia Tecidos position performs unexpectedly, Pettenati 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 Pettenati will offset losses from the drop in Pettenati's long position.| Companhia Tecidos vs. Engie Brasil Energia | Companhia Tecidos vs. Grendene SA | Companhia Tecidos vs. M Dias Branco |
| Pettenati vs. Schulz SA | Pettenati vs. Springs Global Participaes | Pettenati vs. Grazziotin SA | Pettenati vs. Marcopolo 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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