Correlation Between Grendene and Tecnisa SA
Can any of the company-specific risk be diversified away by investing in both Grendene and Tecnisa 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 Grendene and Tecnisa SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Grendene SA and Tecnisa SA, you can compare the effects of market volatilities on Grendene and Tecnisa 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 Grendene with a short position of Tecnisa SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grendene and Tecnisa SA.
Diversification Opportunities for Grendene and Tecnisa SA
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Grendene and Tecnisa is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Grendene SA and Tecnisa SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tecnisa 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 Tecnisa SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tecnisa SA has no effect on the direction of Grendene i.e., Grendene and Tecnisa SA go up and down completely randomly.
Pair Corralation between Grendene and Tecnisa SA
Assuming the 90 days trading horizon Grendene SA is expected to generate 0.62 times more return on investment than Tecnisa SA. However, Grendene SA is 1.6 times less risky than Tecnisa SA. It trades about -0.06 of its potential returns per unit of risk. Tecnisa SA is currently generating about -0.17 per unit of risk. If you would invest 591.00 in Grendene SA on September 12, 2024 and sell it today you would lose (46.00) from holding Grendene SA or give up 7.78% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Grendene SA vs. Tecnisa SA
Performance |
| Timeline |
| Grendene SA |
| Tecnisa SA |
Grendene and Tecnisa SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Grendene and Tecnisa SA
The main advantage of trading using opposite Grendene and Tecnisa SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grendene position performs unexpectedly, Tecnisa 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 Tecnisa SA will offset losses from the drop in Tecnisa SA's long position.The idea behind Grendene SA and Tecnisa SA pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Tecnisa SA vs. Tupy SA | Tecnisa SA vs. Engie Brasil Energia | Tecnisa SA vs. Grendene SA | Tecnisa SA vs. M Dias Branco |
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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