Correlation Between Lupatech and Alpargatas
Can any of the company-specific risk be diversified away by investing in both Lupatech and Alpargatas 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 Lupatech and Alpargatas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lupatech SA and Alpargatas SA, you can compare the effects of market volatilities on Lupatech and Alpargatas 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 Lupatech with a short position of Alpargatas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lupatech and Alpargatas.
Diversification Opportunities for Lupatech and Alpargatas
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Lupatech and Alpargatas is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Lupatech SA and Alpargatas SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alpargatas SA and Lupatech 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 Lupatech SA are associated (or correlated) with Alpargatas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alpargatas SA has no effect on the direction of Lupatech i.e., Lupatech and Alpargatas go up and down completely randomly.
Pair Corralation between Lupatech and Alpargatas
Assuming the 90 days trading horizon Lupatech SA is expected to under-perform the Alpargatas. In addition to that, Lupatech is 1.28 times more volatile than Alpargatas SA. It trades about -0.04 of its total potential returns per unit of risk. Alpargatas SA is currently generating about -0.04 per unit of volatility. If you would invest 1,357 in Alpargatas SA on September 3, 2024 and sell it today you would lose (727.00) from holding Alpargatas SA or give up 53.57% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lupatech SA vs. Alpargatas SA
Performance |
| Timeline |
| Lupatech SA |
| Alpargatas SA |
Lupatech and Alpargatas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lupatech and Alpargatas
The main advantage of trading using opposite Lupatech and Alpargatas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lupatech position performs unexpectedly, Alpargatas 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 Alpargatas will offset losses from the drop in Alpargatas' long position.| Lupatech vs. PDG Realty SA | Lupatech vs. Positivo Tecnologia SA | Lupatech vs. Rossi Residencial SA | Lupatech vs. Eternit SA |
| Alpargatas vs. Localiza Rent a | Alpargatas vs. Raia Drogasil SA | Alpargatas vs. Lojas Renner SA | Alpargatas vs. Grendene 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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