Correlation Between Gafisa SA and LPS Brasil
Can any of the company-specific risk be diversified away by investing in both Gafisa SA and LPS Brasil 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 Gafisa SA and LPS Brasil into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gafisa SA and LPS Brasil , you can compare the effects of market volatilities on Gafisa SA and LPS Brasil 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 Gafisa SA with a short position of LPS Brasil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gafisa SA and LPS Brasil.
Diversification Opportunities for Gafisa SA and LPS Brasil
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Gafisa and LPS is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Gafisa SA and LPS Brasil in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LPS Brasil and Gafisa 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 Gafisa SA are associated (or correlated) with LPS Brasil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LPS Brasil has no effect on the direction of Gafisa SA i.e., Gafisa SA and LPS Brasil go up and down completely randomly.
Pair Corralation between Gafisa SA and LPS Brasil
Assuming the 90 days trading horizon Gafisa SA is expected to generate 1.21 times less return on investment than LPS Brasil. In addition to that, Gafisa SA is 1.63 times more volatile than LPS Brasil . It trades about 0.04 of its total potential returns per unit of risk. LPS Brasil is currently generating about 0.08 per unit of volatility. If you would invest 158.00 in LPS Brasil on September 2, 2024 and sell it today you would earn a total of 7.00 from holding LPS Brasil or generate 4.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gafisa SA vs. LPS Brasil
Performance |
| Timeline |
| Gafisa SA |
| LPS Brasil |
Gafisa SA and LPS Brasil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gafisa SA and LPS Brasil
The main advantage of trading using opposite Gafisa SA and LPS Brasil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gafisa SA position performs unexpectedly, LPS Brasil 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 LPS Brasil will offset losses from the drop in LPS Brasil's long position.| Gafisa SA vs. Engie Brasil Energia | Gafisa SA vs. Energisa SA | Gafisa SA vs. Clave Indices De | Gafisa SA vs. BTG Pactual Logstica |
| LPS Brasil vs. Tecnisa SA | LPS Brasil vs. Even Construtora e | LPS Brasil vs. EZTEC Empreendimentos e | LPS Brasil vs. Gafisa 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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