Correlation Between Eucatex SA and Companhia Habitasul
Can any of the company-specific risk be diversified away by investing in both Eucatex SA and Companhia Habitasul 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 Eucatex SA and Companhia Habitasul into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eucatex SA Indstria and Companhia Habitasul de, you can compare the effects of market volatilities on Eucatex SA and Companhia Habitasul 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 Eucatex SA with a short position of Companhia Habitasul. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eucatex SA and Companhia Habitasul.
Diversification Opportunities for Eucatex SA and Companhia Habitasul
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Eucatex and Companhia is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Eucatex SA Indstria and Companhia Habitasul de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Companhia Habitasul and Eucatex SA 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 Eucatex SA Indstria are associated (or correlated) with Companhia Habitasul. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Companhia Habitasul has no effect on the direction of Eucatex SA i.e., Eucatex SA and Companhia Habitasul go up and down completely randomly.
Pair Corralation between Eucatex SA and Companhia Habitasul
Assuming the 90 days trading horizon Eucatex SA Indstria is expected to under-perform the Companhia Habitasul. But the preferred stock apears to be less risky and, when comparing its historical volatility, Eucatex SA Indstria is 2.11 times less risky than Companhia Habitasul. The preferred stock trades about -0.21 of its potential returns per unit of risk. The Companhia Habitasul de is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest 3,200 in Companhia Habitasul de on August 27, 2024 and sell it today you would lose (110.00) from holding Companhia Habitasul de or give up 3.44% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eucatex SA Indstria vs. Companhia Habitasul de
Performance |
| Timeline |
| Eucatex SA Indstria |
| Companhia Habitasul |
Eucatex SA and Companhia Habitasul Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eucatex SA and Companhia Habitasul
The main advantage of trading using opposite Eucatex SA and Companhia Habitasul positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eucatex SA position performs unexpectedly, Companhia Habitasul 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 Habitasul will offset losses from the drop in Companhia Habitasul's long position.| Eucatex SA vs. Eternit SA | Eucatex SA vs. Cia de Ferro | Eucatex SA vs. Fras le SA | Eucatex SA vs. Iochpe Maxion 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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