Correlation Between Gafisa SA and Lupatech
Can any of the company-specific risk be diversified away by investing in both Gafisa SA and Lupatech 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 Lupatech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gafisa SA and Lupatech SA, you can compare the effects of market volatilities on Gafisa SA and Lupatech 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 Lupatech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gafisa SA and Lupatech.
Diversification Opportunities for Gafisa SA and Lupatech
Very weak diversification
The 3 months correlation between Gafisa and Lupatech is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Gafisa SA and Lupatech SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lupatech SA 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 Lupatech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lupatech SA has no effect on the direction of Gafisa SA i.e., Gafisa SA and Lupatech go up and down completely randomly.
Pair Corralation between Gafisa SA and Lupatech
Assuming the 90 days trading horizon Gafisa SA is expected to under-perform the Lupatech. In addition to that, Gafisa SA is 2.1 times more volatile than Lupatech SA. It trades about -0.06 of its total potential returns per unit of risk. Lupatech SA is currently generating about -0.05 per unit of volatility. If you would invest 219.00 in Lupatech SA on September 12, 2024 and sell it today you would lose (87.00) from holding Lupatech SA or give up 39.73% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gafisa SA vs. Lupatech SA
Performance |
| Timeline |
| Gafisa SA |
| Lupatech SA |
Gafisa SA and Lupatech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gafisa SA and Lupatech
The main advantage of trading using opposite Gafisa SA and Lupatech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gafisa SA position performs unexpectedly, Lupatech 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 Lupatech will offset losses from the drop in Lupatech's long position.| Gafisa SA vs. Cyrela Brazil Realty | Gafisa SA vs. Rossi Residencial SA | Gafisa SA vs. MRV Engenharia e | Gafisa SA vs. PDG Realty SA |
| Lupatech vs. PDG Realty SA | Lupatech vs. Positivo Tecnologia SA | Lupatech vs. Rossi Residencial SA | Lupatech 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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