Correlation Between PagSeguro Digital and Stem
Can any of the company-specific risk be diversified away by investing in both PagSeguro Digital and Stem 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 PagSeguro Digital and Stem into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PagSeguro Digital and Stem Inc, you can compare the effects of market volatilities on PagSeguro Digital and Stem 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 PagSeguro Digital with a short position of Stem. Check out your portfolio center. Please also check ongoing floating volatility patterns of PagSeguro Digital and Stem.
Diversification Opportunities for PagSeguro Digital and Stem
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between PagSeguro and Stem is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding PagSeguro Digital and Stem Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stem Inc and PagSeguro Digital 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 PagSeguro Digital are associated (or correlated) with Stem. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stem Inc has no effect on the direction of PagSeguro Digital i.e., PagSeguro Digital and Stem go up and down completely randomly.
Pair Corralation between PagSeguro Digital and Stem
Given the investment horizon of 90 days PagSeguro Digital is expected to generate 0.42 times more return on investment than Stem. However, PagSeguro Digital is 2.37 times less risky than Stem. It trades about 0.01 of its potential returns per unit of risk. Stem Inc is currently generating about -0.06 per unit of risk. If you would invest 879.00 in PagSeguro Digital on August 28, 2024 and sell it today you would lose (57.00) from holding PagSeguro Digital or give up 6.48% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PagSeguro Digital vs. Stem Inc
Performance |
| Timeline |
| PagSeguro Digital |
| Stem Inc |
PagSeguro Digital and Stem Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PagSeguro Digital and Stem
The main advantage of trading using opposite PagSeguro Digital and Stem positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PagSeguro Digital position performs unexpectedly, Stem 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 Stem will offset losses from the drop in Stem's long position.| PagSeguro Digital vs. Marqeta | PagSeguro Digital vs. StoneCo | PagSeguro Digital vs. Confluent | PagSeguro Digital vs. Dlocal |
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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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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