Correlation Between Eucatex SA and Hotis Othon
Can any of the company-specific risk be diversified away by investing in both Eucatex SA and Hotis Othon 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 Hotis Othon 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 Hotis Othon SA, you can compare the effects of market volatilities on Eucatex SA and Hotis Othon 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 Hotis Othon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eucatex SA and Hotis Othon.
Diversification Opportunities for Eucatex SA and Hotis Othon
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Eucatex and Hotis is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Eucatex SA Indstria and Hotis Othon SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hotis Othon 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 Hotis Othon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hotis Othon SA has no effect on the direction of Eucatex SA i.e., Eucatex SA and Hotis Othon go up and down completely randomly.
Pair Corralation between Eucatex SA and Hotis Othon
Assuming the 90 days trading horizon Eucatex SA Indstria is expected to under-perform the Hotis Othon. But the preferred stock apears to be less risky and, when comparing its historical volatility, Eucatex SA Indstria is 3.08 times less risky than Hotis Othon. The preferred stock trades about -0.17 of its potential returns per unit of risk. The Hotis Othon SA is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 227.00 in Hotis Othon SA on August 27, 2024 and sell it today you would earn a total of 26.00 from holding Hotis Othon SA or generate 11.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eucatex SA Indstria vs. Hotis Othon SA
Performance |
| Timeline |
| Eucatex SA Indstria |
| Hotis Othon SA |
Eucatex SA and Hotis Othon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eucatex SA and Hotis Othon
The main advantage of trading using opposite Eucatex SA and Hotis Othon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eucatex SA position performs unexpectedly, Hotis Othon 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 Hotis Othon will offset losses from the drop in Hotis Othon'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 |
| Hotis Othon vs. Lupatech SA | Hotis Othon vs. Hrcules SA | Hotis Othon vs. HAGA SA Indstria | Hotis Othon vs. Bombril 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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