Correlation Between Lojas Renner and Lenta PLC
Can any of the company-specific risk be diversified away by investing in both Lojas Renner and Lenta PLC 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 Lojas Renner and Lenta PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lojas Renner SA and Lenta PLC, you can compare the effects of market volatilities on Lojas Renner and Lenta PLC 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 Lojas Renner with a short position of Lenta PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lojas Renner and Lenta PLC.
Diversification Opportunities for Lojas Renner and Lenta PLC
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Lojas and Lenta is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Lojas Renner SA and Lenta PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lenta PLC and Lojas Renner 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 Lojas Renner SA are associated (or correlated) with Lenta PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lenta PLC has no effect on the direction of Lojas Renner i.e., Lojas Renner and Lenta PLC go up and down completely randomly.
Pair Corralation between Lojas Renner and Lenta PLC
If you would invest 177.00 in Lenta PLC on August 27, 2024 and sell it today you would earn a total of 0.00 from holding Lenta PLC or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lojas Renner SA vs. Lenta PLC
Performance |
| Timeline |
| Lojas Renner SA |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Lenta PLC |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Lojas Renner and Lenta PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lojas Renner and Lenta PLC
The main advantage of trading using opposite Lojas Renner and Lenta PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lojas Renner position performs unexpectedly, Lenta PLC 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 Lenta PLC will offset losses from the drop in Lenta PLC's long position.The idea behind Lojas Renner SA and Lenta PLC 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.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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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