Correlation Between Neogrid Participaes and Padtec Holding
Can any of the company-specific risk be diversified away by investing in both Neogrid Participaes and Padtec Holding 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 Padtec Holding 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 Padtec Holding SA, you can compare the effects of market volatilities on Neogrid Participaes and Padtec Holding 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 Padtec Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Neogrid Participaes and Padtec Holding.
Diversification Opportunities for Neogrid Participaes and Padtec Holding
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Neogrid and Padtec is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Neogrid Participaes SA and Padtec Holding SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Padtec Holding SA 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 Padtec Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Padtec Holding SA has no effect on the direction of Neogrid Participaes i.e., Neogrid Participaes and Padtec Holding go up and down completely randomly.
Pair Corralation between Neogrid Participaes and Padtec Holding
Assuming the 90 days trading horizon Neogrid Participaes SA is expected to generate 33.08 times more return on investment than Padtec Holding. However, Neogrid Participaes is 33.08 times more volatile than Padtec Holding SA. It trades about 0.09 of its potential returns per unit of risk. Padtec Holding SA is currently generating about -0.06 per unit of risk. If you would invest 5,425 in Neogrid Participaes SA on October 12, 2024 and sell it today you would lose (3,456) from holding Neogrid Participaes SA or give up 63.71% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.75% |
| Values | Daily Returns |
Neogrid Participaes SA vs. Padtec Holding SA
Performance |
| Timeline |
| Neogrid Participaes |
| Padtec Holding SA |
Neogrid Participaes and Padtec Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Neogrid Participaes and Padtec Holding
The main advantage of trading using opposite Neogrid Participaes and Padtec Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Neogrid Participaes position performs unexpectedly, Padtec Holding 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 Padtec Holding will offset losses from the drop in Padtec Holding'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 |
| Padtec Holding vs. Neogrid Participaes SA | Padtec Holding vs. Ambipar Participaes e | Padtec Holding vs. Enjoei SA | Padtec Holding vs. Moura Dubeux Engenharia |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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