Correlation Between Odontoprev and Gafisa SA
Can any of the company-specific risk be diversified away by investing in both Odontoprev and Gafisa 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 Odontoprev and Gafisa SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Odontoprev SA and Gafisa SA, you can compare the effects of market volatilities on Odontoprev and Gafisa 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 Odontoprev with a short position of Gafisa SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Odontoprev and Gafisa SA.
Diversification Opportunities for Odontoprev and Gafisa SA
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Odontoprev and Gafisa is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Odontoprev SA and Gafisa SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gafisa SA and Odontoprev 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 Odontoprev SA are associated (or correlated) with Gafisa SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gafisa SA has no effect on the direction of Odontoprev i.e., Odontoprev and Gafisa SA go up and down completely randomly.
Pair Corralation between Odontoprev and Gafisa SA
Assuming the 90 days trading horizon Odontoprev SA is expected to generate 0.32 times more return on investment than Gafisa SA. However, Odontoprev SA is 3.15 times less risky than Gafisa SA. It trades about 0.04 of its potential returns per unit of risk. Gafisa SA is currently generating about -0.01 per unit of risk. If you would invest 734.00 in Odontoprev SA on August 23, 2024 and sell it today you would earn a total of 317.00 from holding Odontoprev SA or generate 43.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Odontoprev SA vs. Gafisa SA
Performance |
| Timeline |
| Odontoprev SA |
| Gafisa SA |
Odontoprev and Gafisa SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Odontoprev and Gafisa SA
The main advantage of trading using opposite Odontoprev and Gafisa SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Odontoprev position performs unexpectedly, Gafisa 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 Gafisa SA will offset losses from the drop in Gafisa SA's long position.| Odontoprev vs. Natura Co Holding | Odontoprev vs. Raia Drogasil SA | Odontoprev vs. Qualicorp Consultoria e | Odontoprev vs. Localiza Rent a |
| Gafisa SA vs. Rossi Residencial SA | Gafisa SA vs. Cyrela Brazil Realty | Gafisa SA vs. BTG Pactual Logstica | Gafisa SA vs. Plano Plano Desenvolvimento |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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