Correlation Between Gafisa SA and Tupy SA
Can any of the company-specific risk be diversified away by investing in both Gafisa SA and Tupy SA 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 Tupy SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gafisa SA and Tupy SA, you can compare the effects of market volatilities on Gafisa SA and Tupy SA 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 Tupy SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gafisa SA and Tupy SA.
Diversification Opportunities for Gafisa SA and Tupy SA
Almost no diversification
The 3 months correlation between Gafisa and Tupy is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Gafisa SA and Tupy SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tupy 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 Tupy SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tupy SA has no effect on the direction of Gafisa SA i.e., Gafisa SA and Tupy SA go up and down completely randomly.
Pair Corralation between Gafisa SA and Tupy SA
Assuming the 90 days trading horizon Gafisa SA is expected to generate 2.69 times more return on investment than Tupy SA. However, Gafisa SA is 2.69 times more volatile than Tupy SA. It trades about 0.04 of its potential returns per unit of risk. Tupy SA is currently generating about -0.24 per unit of risk. If you would invest 146.00 in Gafisa SA on September 2, 2024 and sell it today you would earn a total of 2.00 from holding Gafisa SA or generate 1.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gafisa SA vs. Tupy SA
Performance |
| Timeline |
| Gafisa SA |
| Tupy SA |
Gafisa SA and Tupy SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gafisa SA and Tupy SA
The main advantage of trading using opposite Gafisa SA and Tupy SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gafisa SA position performs unexpectedly, Tupy SA 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 Tupy SA will offset losses from the drop in Tupy SA's long position.| Gafisa SA vs. Engie Brasil Energia | Gafisa SA vs. Fras le SA | Gafisa SA vs. Energisa SA | Gafisa SA vs. Clave Indices De |
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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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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