Correlation Between Guararapes Confeces and Lojas Renner
Can any of the company-specific risk be diversified away by investing in both Guararapes Confeces and Lojas Renner 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 Guararapes Confeces and Lojas Renner into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Guararapes Confeces SA and Lojas Renner SA, you can compare the effects of market volatilities on Guararapes Confeces and Lojas Renner 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 Guararapes Confeces with a short position of Lojas Renner. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guararapes Confeces and Lojas Renner.
Diversification Opportunities for Guararapes Confeces and Lojas Renner
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Guararapes and Lojas is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Guararapes Confeces SA and Lojas Renner SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lojas Renner SA and Guararapes Confeces 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 Guararapes Confeces SA are associated (or correlated) with Lojas Renner. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lojas Renner SA has no effect on the direction of Guararapes Confeces i.e., Guararapes Confeces and Lojas Renner go up and down completely randomly.
Pair Corralation between Guararapes Confeces and Lojas Renner
Assuming the 90 days trading horizon Guararapes Confeces SA is expected to generate 1.48 times more return on investment than Lojas Renner. However, Guararapes Confeces is 1.48 times more volatile than Lojas Renner SA. It trades about 0.03 of its potential returns per unit of risk. Lojas Renner SA is currently generating about -0.01 per unit of risk. If you would invest 602.00 in Guararapes Confeces SA on August 31, 2024 and sell it today you would earn a total of 95.00 from holding Guararapes Confeces SA or generate 15.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 98.94% |
| Values | Daily Returns |
Guararapes Confeces SA vs. Lojas Renner SA
Performance |
| Timeline |
| Guararapes Confeces |
| Lojas Renner SA |
Guararapes Confeces and Lojas Renner Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Guararapes Confeces and Lojas Renner
The main advantage of trading using opposite Guararapes Confeces and Lojas Renner positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guararapes Confeces position performs unexpectedly, Lojas Renner 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 Lojas Renner will offset losses from the drop in Lojas Renner's long position.| Guararapes Confeces vs. Lojas Renner SA | Guararapes Confeces vs. Marisa Lojas SA | Guararapes Confeces vs. Vulcabras Azaleia SA | Guararapes Confeces vs. Alpargatas SA |
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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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