Correlation Between Light SA and Banco BTG
Can any of the company-specific risk be diversified away by investing in both Light SA and Banco BTG 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 Light SA and Banco BTG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Light SA and Banco BTG Pactual, you can compare the effects of market volatilities on Light SA and Banco BTG 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 Light SA with a short position of Banco BTG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Light SA and Banco BTG.
Diversification Opportunities for Light SA and Banco BTG
Very weak diversification
The 3 months correlation between Light and Banco is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Light SA and Banco BTG Pactual in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banco BTG Pactual and Light 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 Light SA are associated (or correlated) with Banco BTG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Banco BTG Pactual has no effect on the direction of Light SA i.e., Light SA and Banco BTG go up and down completely randomly.
Pair Corralation between Light SA and Banco BTG
Assuming the 90 days trading horizon Light SA is expected to under-perform the Banco BTG. In addition to that, Light SA is 1.46 times more volatile than Banco BTG Pactual. It trades about -0.21 of its total potential returns per unit of risk. Banco BTG Pactual is currently generating about -0.22 per unit of volatility. If you would invest 3,360 in Banco BTG Pactual on September 12, 2024 and sell it today you would lose (276.00) from holding Banco BTG Pactual or give up 8.21% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Light SA vs. Banco BTG Pactual
Performance |
| Timeline |
| Light SA |
| Banco BTG Pactual |
Light SA and Banco BTG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Light SA and Banco BTG
The main advantage of trading using opposite Light SA and Banco BTG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Light SA position performs unexpectedly, Banco BTG 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 Banco BTG will offset losses from the drop in Banco BTG's long position.| Light SA vs. CPFL Energia SA | Light SA vs. Companhia Energtica de | Light SA vs. Centrais Eltricas Brasileiras | Light SA 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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