Correlation Between Plascar Participaes and Lupatech
Can any of the company-specific risk be diversified away by investing in both Plascar Participaes and Lupatech 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 Plascar Participaes and Lupatech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Plascar Participaes Industriais and Lupatech SA, you can compare the effects of market volatilities on Plascar Participaes and Lupatech 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 Plascar Participaes with a short position of Lupatech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Plascar Participaes and Lupatech.
Diversification Opportunities for Plascar Participaes and Lupatech
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Plascar and Lupatech is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Plascar Participaes Industriai and Lupatech SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lupatech SA and Plascar 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 Plascar Participaes Industriais are associated (or correlated) with Lupatech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lupatech SA has no effect on the direction of Plascar Participaes i.e., Plascar Participaes and Lupatech go up and down completely randomly.
Pair Corralation between Plascar Participaes and Lupatech
Assuming the 90 days trading horizon Plascar Participaes Industriais is expected to generate 0.85 times more return on investment than Lupatech. However, Plascar Participaes Industriais is 1.18 times less risky than Lupatech. It trades about 0.17 of its potential returns per unit of risk. Lupatech SA is currently generating about -0.11 per unit of risk. If you would invest 550.00 in Plascar Participaes Industriais on September 2, 2024 and sell it today you would earn a total of 50.00 from holding Plascar Participaes Industriais or generate 9.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Plascar Participaes Industriai vs. Lupatech SA
Performance |
| Timeline |
| Plascar Participaes |
| Lupatech SA |
Plascar Participaes and Lupatech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Plascar Participaes and Lupatech
The main advantage of trading using opposite Plascar Participaes and Lupatech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Plascar Participaes position performs unexpectedly, Lupatech 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 Lupatech will offset losses from the drop in Lupatech's long position.| Plascar Participaes vs. Engie Brasil Energia | Plascar Participaes vs. Energisa SA | Plascar Participaes vs. Clave Indices De | Plascar Participaes vs. BTG Pactual Logstica |
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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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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