Correlation Between Itasa Investimentos and Klabin SA
Can any of the company-specific risk be diversified away by investing in both Itasa Investimentos and Klabin 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 Itasa Investimentos and Klabin SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Itasa Investimentos and Klabin SA, you can compare the effects of market volatilities on Itasa Investimentos and Klabin 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 Itasa Investimentos with a short position of Klabin SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Itasa Investimentos and Klabin SA.
Diversification Opportunities for Itasa Investimentos and Klabin SA
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Itasa and Klabin is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Itasa Investimentos and Klabin SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Klabin SA and Itasa Investimentos 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 Itasa Investimentos are associated (or correlated) with Klabin SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Klabin SA has no effect on the direction of Itasa Investimentos i.e., Itasa Investimentos and Klabin SA go up and down completely randomly.
Pair Corralation between Itasa Investimentos and Klabin SA
Assuming the 90 days trading horizon Itasa Investimentos is expected to generate 0.66 times more return on investment than Klabin SA. However, Itasa Investimentos is 1.52 times less risky than Klabin SA. It trades about 0.06 of its potential returns per unit of risk. Klabin SA is currently generating about 0.04 per unit of risk. If you would invest 716.00 in Itasa Investimentos on August 24, 2024 and sell it today you would earn a total of 304.00 from holding Itasa Investimentos or generate 42.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.8% |
| Values | Daily Returns |
Itasa Investimentos vs. Klabin SA
Performance |
| Timeline |
| Itasa Investimentos |
| Klabin SA |
Itasa Investimentos and Klabin SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Itasa Investimentos and Klabin SA
The main advantage of trading using opposite Itasa Investimentos and Klabin SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Itasa Investimentos position performs unexpectedly, Klabin 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 Klabin SA will offset losses from the drop in Klabin SA's long position.| Itasa Investimentos vs. Banco Santander SA | Itasa Investimentos vs. Banco do Estado | Itasa Investimentos vs. Banco do Estado | Itasa Investimentos vs. Banco da Amaznia |
| Klabin SA vs. Metalurgica Gerdau SA | Klabin SA vs. Companhia Siderrgica Nacional | Klabin SA vs. Companhia Energtica de | Klabin SA vs. Companhia Paranaense de |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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