Correlation Between Oi SA and Banco Pan
Can any of the company-specific risk be diversified away by investing in both Oi SA and Banco Pan 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 Oi SA and Banco Pan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Oi SA and Banco Pan SA, you can compare the effects of market volatilities on Oi SA and Banco Pan 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 Oi SA with a short position of Banco Pan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oi SA and Banco Pan.
Diversification Opportunities for Oi SA and Banco Pan
Poor diversification
The 3 months correlation between OIBR3 and Banco is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Oi SA and Banco Pan SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banco Pan SA and Oi SA 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 Oi SA are associated (or correlated) with Banco Pan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Banco Pan SA has no effect on the direction of Oi SA i.e., Oi SA and Banco Pan go up and down completely randomly.
Pair Corralation between Oi SA and Banco Pan
Assuming the 90 days trading horizon Oi SA is expected to under-perform the Banco Pan. In addition to that, Oi SA is 9.42 times more volatile than Banco Pan SA. It trades about -0.11 of its total potential returns per unit of risk. Banco Pan SA is currently generating about -0.32 per unit of volatility. If you would invest 887.00 in Banco Pan SA on August 28, 2024 and sell it today you would lose (131.00) from holding Banco Pan SA or give up 14.77% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Oi SA vs. Banco Pan SA
Performance |
| Timeline |
| Oi SA |
| Banco Pan SA |
Oi SA and Banco Pan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Oi SA and Banco Pan
The main advantage of trading using opposite Oi SA and Banco Pan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oi SA position performs unexpectedly, Banco Pan 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 Banco Pan will offset losses from the drop in Banco Pan's long position.| Oi SA vs. IRB Brasil Resseguros SA | Oi SA vs. Magazine Luiza SA | Oi SA vs. Cogna Educao SA | Oi SA vs. Oi SA |
| Banco Pan vs. Banco Alfa de | Banco Pan vs. Banestes SA | Banco Pan vs. Banco da Amaznia | Banco Pan vs. Financeira Alfa 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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