Correlation Between Fras Le and Boa Safra
Can any of the company-specific risk be diversified away by investing in both Fras Le and Boa Safra 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 Boa Safra 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 Boa Safra Sementes, you can compare the effects of market volatilities on Fras Le and Boa Safra 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 Boa Safra. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fras Le and Boa Safra.
Diversification Opportunities for Fras Le and Boa Safra
Good diversification
The 3 months correlation between Fras and Boa is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Fras le SA and Boa Safra Sementes in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boa Safra Sementes 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 Boa Safra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boa Safra Sementes has no effect on the direction of Fras Le i.e., Fras Le and Boa Safra go up and down completely randomly.
Pair Corralation between Fras Le and Boa Safra
Assuming the 90 days trading horizon Fras le SA is expected to generate 0.6 times more return on investment than Boa Safra. However, Fras le SA is 1.67 times less risky than Boa Safra. It trades about -0.09 of its potential returns per unit of risk. Boa Safra Sementes is currently generating about -0.13 per unit of risk. If you would invest 2,110 in Fras le SA on September 2, 2024 and sell it today you would lose (74.00) from holding Fras le SA or give up 3.51% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fras le SA vs. Boa Safra Sementes
Performance |
| Timeline |
| Fras le SA |
| Boa Safra Sementes |
Fras Le and Boa Safra Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fras Le and Boa Safra
The main advantage of trading using opposite Fras Le and Boa Safra positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fras Le position performs unexpectedly, Boa Safra 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 Boa Safra will offset losses from the drop in Boa Safra's long position.| Fras Le vs. Engie Brasil Energia | Fras Le vs. Energisa SA | Fras Le vs. Clave Indices De | Fras Le vs. BTG Pactual Logstica |
| Boa Safra vs. Ambipar Participaes e | Boa Safra vs. Vamos Locao de | Boa Safra vs. Petroreconcavo SA | Boa Safra vs. Fras le 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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