Correlation Between Caixa Seguridade and Companhia Paranaense
Can any of the company-specific risk be diversified away by investing in both Caixa Seguridade and Companhia Paranaense 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 Caixa Seguridade and Companhia Paranaense into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caixa Seguridade Participaes and Companhia Paranaense de, you can compare the effects of market volatilities on Caixa Seguridade and Companhia Paranaense 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 Caixa Seguridade with a short position of Companhia Paranaense. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caixa Seguridade and Companhia Paranaense.
Diversification Opportunities for Caixa Seguridade and Companhia Paranaense
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Caixa and Companhia is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Caixa Seguridade Participaes and Companhia Paranaense de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Companhia Paranaense and Caixa Seguridade 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 Caixa Seguridade Participaes are associated (or correlated) with Companhia Paranaense. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Companhia Paranaense has no effect on the direction of Caixa Seguridade i.e., Caixa Seguridade and Companhia Paranaense go up and down completely randomly.
Pair Corralation between Caixa Seguridade and Companhia Paranaense
Assuming the 90 days trading horizon Caixa Seguridade Participaes is expected to generate 1.09 times more return on investment than Companhia Paranaense. However, Caixa Seguridade is 1.09 times more volatile than Companhia Paranaense de. It trades about 0.08 of its potential returns per unit of risk. Companhia Paranaense de is currently generating about 0.06 per unit of risk. If you would invest 962.00 in Caixa Seguridade Participaes on September 1, 2024 and sell it today you would earn a total of 491.00 from holding Caixa Seguridade Participaes or generate 51.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.73% |
| Values | Daily Returns |
Caixa Seguridade Participaes vs. Companhia Paranaense de
Performance |
| Timeline |
| Caixa Seguridade Par |
| Companhia Paranaense |
Caixa Seguridade and Companhia Paranaense Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caixa Seguridade and Companhia Paranaense
The main advantage of trading using opposite Caixa Seguridade and Companhia Paranaense positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caixa Seguridade position performs unexpectedly, Companhia Paranaense 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 Companhia Paranaense will offset losses from the drop in Companhia Paranaense's long position.| Caixa Seguridade vs. CSN Minerao SA | Caixa Seguridade vs. BB Seguridade Participacoes | Caixa Seguridade vs. Razen SA | Caixa Seguridade vs. Vibra Energia SA |
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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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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