Correlation Between Grendene and Ser Educacional
Can any of the company-specific risk be diversified away by investing in both Grendene and Ser Educacional 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 Grendene and Ser Educacional into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Grendene SA and Ser Educacional Sa, you can compare the effects of market volatilities on Grendene and Ser Educacional 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 Grendene with a short position of Ser Educacional. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grendene and Ser Educacional.
Diversification Opportunities for Grendene and Ser Educacional
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Grendene and Ser is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Grendene SA and Ser Educacional Sa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ser Educacional Sa and Grendene 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 Grendene SA are associated (or correlated) with Ser Educacional. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ser Educacional Sa has no effect on the direction of Grendene i.e., Grendene and Ser Educacional go up and down completely randomly.
Pair Corralation between Grendene and Ser Educacional
Assuming the 90 days trading horizon Grendene is expected to generate 3.68 times less return on investment than Ser Educacional. But when comparing it to its historical volatility, Grendene SA is 2.05 times less risky than Ser Educacional. It trades about 0.02 of its potential returns per unit of risk. Ser Educacional Sa is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 400.00 in Ser Educacional Sa on September 26, 2024 and sell it today you would earn a total of 56.00 from holding Ser Educacional Sa or generate 14.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Grendene SA vs. Ser Educacional Sa
Performance |
| Timeline |
| Grendene SA |
| Ser Educacional Sa |
Grendene and Ser Educacional Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Grendene and Ser Educacional
The main advantage of trading using opposite Grendene and Ser Educacional positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grendene position performs unexpectedly, Ser Educacional 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 Ser Educacional will offset losses from the drop in Ser Educacional's long position.| Grendene vs. M Dias Branco | Grendene vs. Fleury SA | Grendene vs. Engie Brasil Energia | Grendene vs. Odontoprev SA |
| Ser Educacional vs. Engie Brasil Energia | Ser Educacional vs. Grendene SA | Ser Educacional vs. M Dias Branco | Ser Educacional vs. BTG Pactual Logstica |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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