Correlation Between Itasa Investimentos and Companhia
Can any of the company-specific risk be diversified away by investing in both Itasa Investimentos and Companhia 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 Companhia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Itasa Investimentos and Companhia de Saneamento, you can compare the effects of market volatilities on Itasa Investimentos and Companhia 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 Companhia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Itasa Investimentos and Companhia.
Diversification Opportunities for Itasa Investimentos and Companhia
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Itasa and Companhia is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Itasa Investimentos and Companhia de Saneamento in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Companhia de Saneamento 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 Companhia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Companhia de Saneamento has no effect on the direction of Itasa Investimentos i.e., Itasa Investimentos and Companhia go up and down completely randomly.
Pair Corralation between Itasa Investimentos and Companhia
Assuming the 90 days trading horizon Itasa Investimentos is expected to under-perform the Companhia. In addition to that, Itasa Investimentos is 1.05 times more volatile than Companhia de Saneamento. It trades about -0.18 of its total potential returns per unit of risk. Companhia de Saneamento is currently generating about 0.37 per unit of volatility. If you would invest 2,289 in Companhia de Saneamento on August 30, 2024 and sell it today you would earn a total of 275.00 from holding Companhia de Saneamento or generate 12.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Itasa Investimentos vs. Companhia de Saneamento
Performance |
| Timeline |
| Itasa Investimentos |
| Companhia de Saneamento |
Itasa Investimentos and Companhia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Itasa Investimentos and Companhia
The main advantage of trading using opposite Itasa Investimentos and Companhia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Itasa Investimentos position performs unexpectedly, Companhia 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 Companhia will offset losses from the drop in Companhia's long position.| Itasa Investimentos vs. BB Seguridade Participacoes | Itasa Investimentos vs. Banco ABC Brasil | Itasa Investimentos vs. Companhia de Saneamento | Itasa Investimentos vs. CTEEP Companhia |
| Companhia vs. CTEEP Companhia | Companhia vs. Companhia de Saneamento | Companhia vs. Companhia Paranaense de | Companhia vs. Companhia de Saneamento |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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