Correlation Between Klabin SA and Companhia Paranaense
Can any of the company-specific risk be diversified away by investing in both Klabin SA and Companhia Paranaense 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 Klabin SA and Companhia Paranaense into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Klabin SA and Companhia Paranaense de, you can compare the effects of market volatilities on Klabin SA and Companhia Paranaense 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 Klabin SA with a short position of Companhia Paranaense. Check out your portfolio center. Please also check ongoing floating volatility patterns of Klabin SA and Companhia Paranaense.
Diversification Opportunities for Klabin SA and Companhia Paranaense
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Klabin and Companhia is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Klabin SA and Companhia Paranaense de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Companhia Paranaense and Klabin 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 Klabin SA are associated (or correlated) with Companhia Paranaense. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Companhia Paranaense has no effect on the direction of Klabin SA i.e., Klabin SA and Companhia Paranaense go up and down completely randomly.
Pair Corralation between Klabin SA and Companhia Paranaense
Assuming the 90 days trading horizon Klabin SA is expected to generate 3.3 times less return on investment than Companhia Paranaense. But when comparing it to its historical volatility, Klabin SA is 1.18 times less risky than Companhia Paranaense. It trades about 0.06 of its potential returns per unit of risk. Companhia Paranaense de is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 817.00 in Companhia Paranaense de on November 5, 2024 and sell it today you would earn a total of 50.00 from holding Companhia Paranaense de or generate 6.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Klabin SA vs. Companhia Paranaense de
Performance |
| Timeline |
| Klabin SA |
| Companhia Paranaense |
Klabin SA and Companhia Paranaense Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Klabin SA and Companhia Paranaense
The main advantage of trading using opposite Klabin SA and Companhia Paranaense positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Klabin SA position performs unexpectedly, Companhia Paranaense 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 Paranaense will offset losses from the drop in Companhia Paranaense's long position.| Klabin SA vs. Klabin SA | Klabin SA vs. Transmissora Aliana de | Klabin SA vs. Klabin SA | Klabin SA vs. Itasa Investimentos |
| Companhia Paranaense vs. Companhia Paranaense de | Companhia Paranaense vs. Companhia de Saneamento | Companhia Paranaense vs. CTEEP Companhia | Companhia Paranaense vs. Companhia Energtica 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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