Correlation Between Companhia Habitasul and BICE11
Can any of the company-specific risk be diversified away by investing in both Companhia Habitasul and BICE11 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 Companhia Habitasul and BICE11 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Companhia Habitasul de and BICE11, you can compare the effects of market volatilities on Companhia Habitasul and BICE11 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 Companhia Habitasul with a short position of BICE11. Check out your portfolio center. Please also check ongoing floating volatility patterns of Companhia Habitasul and BICE11.
Diversification Opportunities for Companhia Habitasul and BICE11
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Companhia and BICE11 is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Companhia Habitasul de and BICE11 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BICE11 and Companhia Habitasul 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 Companhia Habitasul de are associated (or correlated) with BICE11. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BICE11 has no effect on the direction of Companhia Habitasul i.e., Companhia Habitasul and BICE11 go up and down completely randomly.
Pair Corralation between Companhia Habitasul and BICE11
Assuming the 90 days trading horizon Companhia Habitasul de is expected to generate 2.5 times more return on investment than BICE11. However, Companhia Habitasul is 2.5 times more volatile than BICE11. It trades about 0.02 of its potential returns per unit of risk. BICE11 is currently generating about 0.03 per unit of risk. If you would invest 3,002 in Companhia Habitasul de on September 12, 2024 and sell it today you would lose (152.00) from holding Companhia Habitasul de or give up 5.06% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 58.15% |
| Values | Daily Returns |
Companhia Habitasul de vs. BICE11
Performance |
| Timeline |
| Companhia Habitasul |
| BICE11 |
Companhia Habitasul and BICE11 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Companhia Habitasul and BICE11
The main advantage of trading using opposite Companhia Habitasul and BICE11 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Companhia Habitasul position performs unexpectedly, BICE11 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 BICE11 will offset losses from the drop in BICE11's long position.| Companhia Habitasul vs. Hotis Othon SA | Companhia Habitasul vs. Hrcules SA | Companhia Habitasul vs. Eucatex SA Indstria | Companhia Habitasul vs. General Shopping e |
| BICE11 vs. BTG Pactual Logstica | BICE11 vs. Plano Plano Desenvolvimento | BICE11 vs. Companhia Habitasul de | BICE11 vs. FDO INV IMOB |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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