Correlation Between Labiana Health and Vale SA
Can any of the company-specific risk be diversified away by investing in both Labiana Health and Vale 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 Labiana Health and Vale SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Labiana Health SA and Vale SA, you can compare the effects of market volatilities on Labiana Health and Vale 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 Labiana Health with a short position of Vale SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Labiana Health and Vale SA.
Diversification Opportunities for Labiana Health and Vale SA
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Labiana and Vale is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Labiana Health SA and Vale SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vale SA and Labiana Health 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 Labiana Health SA are associated (or correlated) with Vale SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vale SA has no effect on the direction of Labiana Health i.e., Labiana Health and Vale SA go up and down completely randomly.
Pair Corralation between Labiana Health and Vale SA
Assuming the 90 days trading horizon Labiana Health SA is expected to under-perform the Vale SA. In addition to that, Labiana Health is 2.07 times more volatile than Vale SA. It trades about -0.19 of its total potential returns per unit of risk. Vale SA is currently generating about -0.16 per unit of volatility. If you would invest 1,026 in Vale SA on August 31, 2024 and sell it today you would lose (80.00) from holding Vale SA or give up 7.8% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Labiana Health SA vs. Vale SA
Performance |
| Timeline |
| Labiana Health SA |
| Vale SA |
Labiana Health and Vale SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Labiana Health and Vale SA
The main advantage of trading using opposite Labiana Health and Vale SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Labiana Health position performs unexpectedly, Vale 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 Vale SA will offset losses from the drop in Vale SA's long position.| Labiana Health vs. Industria de Diseno | Labiana Health vs. Iberdrola SA | Labiana Health vs. Banco Santander | Labiana Health vs. Caixabank SA |
| Vale SA vs. Berkeley Energia Limited | Vale SA vs. Metrovacesa SA | Vale SA vs. Elecnor SA | Vale SA vs. Mapfre |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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