Correlation Between Fras Le and Capitania Agro
Can any of the company-specific risk be diversified away by investing in both Fras Le and Capitania Agro 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 Fras Le and Capitania Agro into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fras le SA and Capitania Agro Strategies, you can compare the effects of market volatilities on Fras Le and Capitania Agro 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 Fras Le with a short position of Capitania Agro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fras Le and Capitania Agro.
Diversification Opportunities for Fras Le and Capitania Agro
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Fras and Capitania is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Fras le SA and Capitania Agro Strategies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capitania Agro Strategies and Fras Le 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 Fras le SA are associated (or correlated) with Capitania Agro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capitania Agro Strategies has no effect on the direction of Fras Le i.e., Fras Le and Capitania Agro go up and down completely randomly.
Pair Corralation between Fras Le and Capitania Agro
Assuming the 90 days trading horizon Fras le SA is expected to under-perform the Capitania Agro. In addition to that, Fras Le is 2.28 times more volatile than Capitania Agro Strategies. It trades about -0.18 of its total potential returns per unit of risk. Capitania Agro Strategies is currently generating about 0.09 per unit of volatility. If you would invest 635.00 in Capitania Agro Strategies on September 4, 2024 and sell it today you would earn a total of 8.00 from holding Capitania Agro Strategies or generate 1.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fras le SA vs. Capitania Agro Strategies
Performance |
| Timeline |
| Fras le SA |
| Capitania Agro Strategies |
Fras Le and Capitania Agro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fras Le and Capitania Agro
The main advantage of trading using opposite Fras Le and Capitania Agro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fras Le position performs unexpectedly, Capitania Agro 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 Capitania Agro will offset losses from the drop in Capitania Agro's long position.The idea behind Fras le SA and Capitania Agro Strategies pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Capitania Agro vs. Capitania Infra Fic | Capitania Agro vs. Capitania Securities II | Capitania Agro vs. RB Capital Office | Capitania Agro vs. Ishares Msci Brazil |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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