Correlation Between Klabin SA and Companhia
Can any of the company-specific risk be diversified away by investing in both Klabin SA 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 Klabin SA and Companhia 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 de Saneamento, you can compare the effects of market volatilities on Klabin SA 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 Klabin SA with a short position of Companhia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Klabin SA and Companhia.
Diversification Opportunities for Klabin SA and Companhia
Weak diversification
The 3 months correlation between Klabin and Companhia is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Klabin SA 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 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. 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 Klabin SA i.e., Klabin SA and Companhia go up and down completely randomly.
Pair Corralation between Klabin SA and Companhia
Assuming the 90 days trading horizon Klabin SA is expected to generate 1.04 times less return on investment than Companhia. In addition to that, Klabin SA is 1.13 times more volatile than Companhia de Saneamento. It trades about 0.17 of its total potential returns per unit of risk. Companhia de Saneamento is currently generating about 0.2 per unit of volatility. If you would invest 512.00 in Companhia de Saneamento on August 30, 2024 and sell it today you would earn a total of 36.00 from holding Companhia de Saneamento or generate 7.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Klabin SA vs. Companhia de Saneamento
Performance |
| Timeline |
| Klabin SA |
| Companhia de Saneamento |
Klabin SA and Companhia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Klabin SA and Companhia
The main advantage of trading using opposite Klabin SA and Companhia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Klabin SA 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.| Klabin SA vs. Klabin SA | Klabin SA vs. Transmissora Aliana de | Klabin SA vs. Itasa Investimentos | Klabin SA vs. Suzano SA |
| Companhia vs. Companhia de Saneamento | Companhia vs. Transmissora Aliana de | Companhia vs. Companhia Paranaense de | Companhia vs. Klabin 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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