Correlation Between Eucatex SA and Hrcules SA
Can any of the company-specific risk be diversified away by investing in both Eucatex SA and Hrcules 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 Eucatex SA and Hrcules SA 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 Hrcules SA , you can compare the effects of market volatilities on Eucatex SA and Hrcules 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 Eucatex SA with a short position of Hrcules SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eucatex SA and Hrcules SA.
Diversification Opportunities for Eucatex SA and Hrcules SA
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Eucatex and Hrcules is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Eucatex SA Indstria and Hrcules SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hrcules SA 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 Hrcules SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hrcules SA has no effect on the direction of Eucatex SA i.e., Eucatex SA and Hrcules SA go up and down completely randomly.
Pair Corralation between Eucatex SA and Hrcules SA
Assuming the 90 days trading horizon Eucatex SA Indstria is expected to generate 0.31 times more return on investment than Hrcules SA. However, Eucatex SA Indstria is 3.21 times less risky than Hrcules SA. It trades about -0.14 of its potential returns per unit of risk. Hrcules SA is currently generating about -0.07 per unit of risk. If you would invest 1,441 in Eucatex SA Indstria on August 24, 2024 and sell it today you would lose (57.00) from holding Eucatex SA Indstria or give up 3.96% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eucatex SA Indstria vs. Hrcules SA
Performance |
| Timeline |
| Eucatex SA Indstria |
| Hrcules SA |
Eucatex SA and Hrcules SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eucatex SA and Hrcules SA
The main advantage of trading using opposite Eucatex SA and Hrcules SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eucatex SA position performs unexpectedly, Hrcules 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 Hrcules SA will offset losses from the drop in Hrcules SA's long position.| Eucatex SA vs. Metalurgica Gerdau SA | Eucatex SA vs. Companhia Siderrgica Nacional | Eucatex SA vs. Companhia Energtica de | Eucatex SA vs. Companhia Paranaense de |
| Hrcules SA vs. Hotis Othon SA | Hrcules SA vs. Inepar SA Indstria | Hrcules SA vs. HAGA SA Indstria | Hrcules SA vs. Refinaria de Petrleos |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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