Correlation Between Basic Materials and Positivo Tecnologia
Can any of the company-specific risk be diversified away by investing in both Basic Materials and Positivo Tecnologia 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 Positivo Tecnologia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Basic Materials and Positivo Tecnologia SA, you can compare the effects of market volatilities on Basic Materials and Positivo Tecnologia 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 Positivo Tecnologia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Basic Materials and Positivo Tecnologia.
Diversification Opportunities for Basic Materials and Positivo Tecnologia
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Basic and Positivo is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Basic Materials and Positivo Tecnologia SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Positivo Tecnologia 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 Positivo Tecnologia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Positivo Tecnologia has no effect on the direction of Basic Materials i.e., Basic Materials and Positivo Tecnologia go up and down completely randomly.
Pair Corralation between Basic Materials and Positivo Tecnologia
Assuming the 90 days trading horizon Basic Materials is expected to generate 0.23 times more return on investment than Positivo Tecnologia. However, Basic Materials is 4.42 times less risky than Positivo Tecnologia. It trades about 0.0 of its potential returns per unit of risk. Positivo Tecnologia SA is currently generating about -0.28 per unit of risk. If you would invest 577,604 in Basic Materials on August 31, 2024 and sell it today you would lose (484.00) from holding Basic Materials or give up 0.08% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Basic Materials vs. Positivo Tecnologia SA
Performance |
| Timeline |
Basic Materials and Positivo Tecnologia Volatility Contrast
Predicted Return Density |
| Returns |
Basic Materials
Pair trading matchups for Basic Materials
Positivo Tecnologia SA
Pair trading matchups for Positivo Tecnologia
Pair Trading with Basic Materials and Positivo Tecnologia
The main advantage of trading using opposite Basic Materials and Positivo Tecnologia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Basic Materials position performs unexpectedly, Positivo Tecnologia 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 Positivo Tecnologia will offset losses from the drop in Positivo Tecnologia's long position.| Basic Materials vs. Micron Technology | Basic Materials vs. Ross Stores | Basic Materials vs. Monster Beverage | Basic Materials vs. TAL Education Group |
| Positivo Tecnologia vs. Marcopolo SA | Positivo Tecnologia vs. Gafisa SA | Positivo Tecnologia vs. Randon SA Implementos | Positivo Tecnologia vs. TOTVS 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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