Correlation Between DTCOM Direct and CA Modas
Can any of the company-specific risk be diversified away by investing in both DTCOM Direct and CA Modas 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 DTCOM Direct and CA Modas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DTCOM Direct and CA Modas SA, you can compare the effects of market volatilities on DTCOM Direct and CA Modas 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 DTCOM Direct with a short position of CA Modas. Check out your portfolio center. Please also check ongoing floating volatility patterns of DTCOM Direct and CA Modas.
Diversification Opportunities for DTCOM Direct and CA Modas
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between DTCOM and CEAB3 is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding DTCOM Direct and CA Modas SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CA Modas SA and DTCOM Direct 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 DTCOM Direct are associated (or correlated) with CA Modas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CA Modas SA has no effect on the direction of DTCOM Direct i.e., DTCOM Direct and CA Modas go up and down completely randomly.
Pair Corralation between DTCOM Direct and CA Modas
Assuming the 90 days trading horizon DTCOM Direct is expected to generate 0.29 times more return on investment than CA Modas. However, DTCOM Direct is 3.47 times less risky than CA Modas. It trades about 0.22 of its potential returns per unit of risk. CA Modas SA is currently generating about -0.2 per unit of risk. If you would invest 410.00 in DTCOM Direct on August 31, 2024 and sell it today you would earn a total of 27.00 from holding DTCOM Direct or generate 6.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
DTCOM Direct vs. CA Modas SA
Performance |
| Timeline |
| DTCOM Direct |
| CA Modas SA |
DTCOM Direct and CA Modas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DTCOM Direct and CA Modas
The main advantage of trading using opposite DTCOM Direct and CA Modas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DTCOM Direct position performs unexpectedly, CA Modas 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 CA Modas will offset losses from the drop in CA Modas' long position.| DTCOM Direct vs. METISA Metalrgica Timboense | DTCOM Direct vs. Lupatech SA | DTCOM Direct vs. Fras le SA | DTCOM Direct vs. Energisa SA |
| CA Modas vs. Marisa Lojas SA | CA Modas vs. Vivara Participaes SA | CA Modas vs. Guararapes Confeces SA | CA Modas vs. Atacado 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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