Correlation Between JBS SA and Cruzeiro
Can any of the company-specific risk be diversified away by investing in both JBS SA and Cruzeiro 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 JBS SA and Cruzeiro into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between JBS SA and Cruzeiro do Sul, you can compare the effects of market volatilities on JBS SA and Cruzeiro 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 JBS SA with a short position of Cruzeiro. Check out your portfolio center. Please also check ongoing floating volatility patterns of JBS SA and Cruzeiro.
Diversification Opportunities for JBS SA and Cruzeiro
Very good diversification
The 3 months correlation between JBS and Cruzeiro is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding JBS SA and Cruzeiro do Sul in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cruzeiro do Sul and JBS SA 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 JBS SA are associated (or correlated) with Cruzeiro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cruzeiro do Sul has no effect on the direction of JBS SA i.e., JBS SA and Cruzeiro go up and down completely randomly.
Pair Corralation between JBS SA and Cruzeiro
Assuming the 90 days trading horizon JBS SA is expected to generate 0.72 times more return on investment than Cruzeiro. However, JBS SA is 1.38 times less risky than Cruzeiro. It trades about 0.07 of its potential returns per unit of risk. Cruzeiro do Sul is currently generating about 0.01 per unit of risk. If you would invest 1,921 in JBS SA on September 26, 2024 and sell it today you would earn a total of 1,800 from holding JBS SA or generate 93.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
JBS SA vs. Cruzeiro do Sul
Performance |
| Timeline |
| JBS SA |
| Cruzeiro do Sul |
JBS SA and Cruzeiro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JBS SA and Cruzeiro
The main advantage of trading using opposite JBS SA and Cruzeiro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JBS SA position performs unexpectedly, Cruzeiro 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 Cruzeiro will offset losses from the drop in Cruzeiro's long position.The idea behind JBS SA and Cruzeiro do Sul pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Cruzeiro vs. New Oriental Education | Cruzeiro vs. TAL Education Group | Cruzeiro vs. Yduqs Participaes SA | Cruzeiro vs. GAEC Educacao 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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