Correlation Between Neogrid Participaes and SIMPAR SA
Can any of the company-specific risk be diversified away by investing in both Neogrid Participaes and SIMPAR 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 Neogrid Participaes and SIMPAR SA 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 SIMPAR SA, you can compare the effects of market volatilities on Neogrid Participaes and SIMPAR 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 Neogrid Participaes with a short position of SIMPAR SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Neogrid Participaes and SIMPAR SA.
Diversification Opportunities for Neogrid Participaes and SIMPAR SA
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Neogrid and SIMPAR is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Neogrid Participaes SA and SIMPAR SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SIMPAR 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 SIMPAR SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SIMPAR SA has no effect on the direction of Neogrid Participaes i.e., Neogrid Participaes and SIMPAR SA go up and down completely randomly.
Pair Corralation between Neogrid Participaes and SIMPAR SA
Assuming the 90 days trading horizon Neogrid Participaes SA is expected to generate 34.56 times more return on investment than SIMPAR SA. However, Neogrid Participaes is 34.56 times more volatile than SIMPAR SA. It trades about 0.1 of its potential returns per unit of risk. SIMPAR SA is currently generating about -0.03 per unit of risk. If you would invest 3,560 in Neogrid Participaes SA on October 12, 2024 and sell it today you would lose (1,630) from holding Neogrid Participaes SA or give up 45.79% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Neogrid Participaes SA vs. SIMPAR SA
Performance |
| Timeline |
| Neogrid Participaes |
| SIMPAR SA |
Neogrid Participaes and SIMPAR SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Neogrid Participaes and SIMPAR SA
The main advantage of trading using opposite Neogrid Participaes and SIMPAR SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Neogrid Participaes position performs unexpectedly, SIMPAR 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 SIMPAR SA will offset losses from the drop in SIMPAR SA'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 |
| SIMPAR SA vs. Ambipar Participaes e | SIMPAR SA vs. Vamos Locao de | SIMPAR SA vs. Movida Participaes SA | SIMPAR SA vs. Petro Rio 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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