Correlation Between Neogrid Participaes and Otis Worldwide
Can any of the company-specific risk be diversified away by investing in both Neogrid Participaes and Otis Worldwide 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 Neogrid Participaes and Otis Worldwide into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Neogrid Participaes SA and Otis Worldwide, you can compare the effects of market volatilities on Neogrid Participaes and Otis Worldwide 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 Neogrid Participaes with a short position of Otis Worldwide. Check out your portfolio center. Please also check ongoing floating volatility patterns of Neogrid Participaes and Otis Worldwide.
Diversification Opportunities for Neogrid Participaes and Otis Worldwide
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Neogrid and Otis is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Neogrid Participaes SA and Otis Worldwide in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Otis Worldwide and Neogrid Participaes 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 Neogrid Participaes SA are associated (or correlated) with Otis Worldwide. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Otis Worldwide has no effect on the direction of Neogrid Participaes i.e., Neogrid Participaes and Otis Worldwide go up and down completely randomly.
Pair Corralation between Neogrid Participaes and Otis Worldwide
Assuming the 90 days trading horizon Neogrid Participaes SA is expected to generate 66.3 times more return on investment than Otis Worldwide. However, Neogrid Participaes is 66.3 times more volatile than Otis Worldwide. It trades about 0.08 of its potential returns per unit of risk. Otis Worldwide is currently generating about 0.16 per unit of risk. If you would invest 3,175 in Neogrid Participaes SA on September 2, 2024 and sell it today you would lose (435.00) from holding Neogrid Participaes SA or give up 13.7% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 72.8% |
| Values | Daily Returns |
Neogrid Participaes SA vs. Otis Worldwide
Performance |
| Timeline |
| Neogrid Participaes |
| Otis Worldwide |
Neogrid Participaes and Otis Worldwide Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Neogrid Participaes and Otis Worldwide
The main advantage of trading using opposite Neogrid Participaes and Otis Worldwide positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Neogrid Participaes position performs unexpectedly, Otis Worldwide 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 Otis Worldwide will offset losses from the drop in Otis Worldwide's long position.| Neogrid Participaes vs. Aeris Indstria e | Neogrid Participaes vs. Mliuz SA | Neogrid Participaes vs. Enjoei SA | Neogrid Participaes vs. Locaweb Servios de |
| Otis Worldwide vs. Mliuz SA | Otis Worldwide vs. Neogrid Participaes SA | Otis Worldwide vs. Pet Center Comrcio | Otis Worldwide vs. Locaweb Servios 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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