Correlation Between Basic Materials and JHSF Participaes
Can any of the company-specific risk be diversified away by investing in both Basic Materials and JHSF Participaes 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 Basic Materials and JHSF Participaes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Basic Materials and JHSF Participaes SA, you can compare the effects of market volatilities on Basic Materials and JHSF Participaes 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 Basic Materials with a short position of JHSF Participaes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Basic Materials and JHSF Participaes.
Diversification Opportunities for Basic Materials and JHSF Participaes
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Basic and JHSF is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Basic Materials and JHSF Participaes SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JHSF Participaes and Basic Materials 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 Basic Materials are associated (or correlated) with JHSF Participaes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JHSF Participaes has no effect on the direction of Basic Materials i.e., Basic Materials and JHSF Participaes go up and down completely randomly.
Pair Corralation between Basic Materials and JHSF Participaes
Assuming the 90 days trading horizon Basic Materials is expected to generate 29.01 times less return on investment than JHSF Participaes. But when comparing it to its historical volatility, Basic Materials is 2.1 times less risky than JHSF Participaes. It trades about 0.01 of its potential returns per unit of risk. JHSF Participaes SA is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 429.00 in JHSF Participaes SA on August 30, 2024 and sell it today you would earn a total of 27.00 from holding JHSF Participaes SA or generate 6.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Basic Materials vs. JHSF Participaes SA
Performance |
| Timeline |
Basic Materials and JHSF Participaes Volatility Contrast
Predicted Return Density |
| Returns |
Basic Materials
Pair trading matchups for Basic Materials
JHSF Participaes SA
Pair trading matchups for JHSF Participaes
Pair Trading with Basic Materials and JHSF Participaes
The main advantage of trading using opposite Basic Materials and JHSF Participaes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Basic Materials position performs unexpectedly, JHSF Participaes 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 JHSF Participaes will offset losses from the drop in JHSF Participaes' long position.| Basic Materials vs. United Rentals | Basic Materials vs. Livetech da Bahia | Basic Materials vs. Telecomunicaes Brasileiras SA | Basic Materials vs. Charter Communications |
| JHSF Participaes vs. Tecnisa SA | JHSF Participaes vs. Cogna Educao SA | JHSF Participaes vs. Cyrela Brazil Realty | JHSF Participaes vs. Helbor Empreendimentos SA |
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 CEOs Directory module to screen CEOs from public companies around the world.
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