Correlation Between Lupatech and Embraer SA
Can any of the company-specific risk be diversified away by investing in both Lupatech and Embraer 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 Lupatech and Embraer SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lupatech SA and Embraer SA, you can compare the effects of market volatilities on Lupatech and Embraer 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 Lupatech with a short position of Embraer SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lupatech and Embraer SA.
Diversification Opportunities for Lupatech and Embraer SA
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Lupatech and Embraer is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Lupatech SA and Embraer SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Embraer 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 Embraer SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Embraer SA has no effect on the direction of Lupatech i.e., Lupatech and Embraer SA go up and down completely randomly.
Pair Corralation between Lupatech and Embraer SA
Assuming the 90 days trading horizon Lupatech SA is expected to under-perform the Embraer SA. In addition to that, Lupatech is 1.07 times more volatile than Embraer SA. It trades about -0.02 of its total potential returns per unit of risk. Embraer SA is currently generating about 0.31 per unit of volatility. If you would invest 4,894 in Embraer SA on August 28, 2024 and sell it today you would earn a total of 817.00 from holding Embraer SA or generate 16.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lupatech SA vs. Embraer SA
Performance |
| Timeline |
| Lupatech SA |
| Embraer SA |
Lupatech and Embraer SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lupatech and Embraer SA
The main advantage of trading using opposite Lupatech and Embraer SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lupatech position performs unexpectedly, Embraer 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 Embraer SA will offset losses from the drop in Embraer SA's long position.| Lupatech vs. PDG Realty SA | Lupatech vs. Positivo Tecnologia SA | Lupatech vs. Rossi Residencial SA | Lupatech vs. Eternit SA |
| Embraer SA vs. Gol Linhas Areas | Embraer SA vs. Gerdau SA | Embraer SA vs. Companhia Siderrgica Nacional | Embraer SA vs. Usinas Siderrgicas de |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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