Correlation Between Dimed SA and Movida Participaes
Can any of the company-specific risk be diversified away by investing in both Dimed SA and Movida Participaes 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 Dimed SA and Movida Participaes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dimed SA Distribuidora and Movida Participaes SA, you can compare the effects of market volatilities on Dimed SA and Movida Participaes 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 Dimed SA with a short position of Movida Participaes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dimed SA and Movida Participaes.
Diversification Opportunities for Dimed SA and Movida Participaes
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Dimed and Movida is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Dimed SA Distribuidora and Movida Participaes SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Movida Participaes and Dimed 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 Dimed SA Distribuidora are associated (or correlated) with Movida Participaes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Movida Participaes has no effect on the direction of Dimed SA i.e., Dimed SA and Movida Participaes go up and down completely randomly.
Pair Corralation between Dimed SA and Movida Participaes
Assuming the 90 days trading horizon Dimed SA Distribuidora is expected to generate 0.33 times more return on investment than Movida Participaes. However, Dimed SA Distribuidora is 3.02 times less risky than Movida Participaes. It trades about -0.05 of its potential returns per unit of risk. Movida Participaes SA is currently generating about -0.09 per unit of risk. If you would invest 995.00 in Dimed SA Distribuidora on September 3, 2024 and sell it today you would lose (49.00) from holding Dimed SA Distribuidora or give up 4.92% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dimed SA Distribuidora vs. Movida Participaes SA
Performance |
| Timeline |
| Dimed SA Distribuidora |
| Movida Participaes |
Dimed SA and Movida Participaes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dimed SA and Movida Participaes
The main advantage of trading using opposite Dimed SA and Movida Participaes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dimed SA position performs unexpectedly, Movida Participaes 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 Movida Participaes will offset losses from the drop in Movida Participaes' long position.| Dimed SA vs. Movida Participaes SA | Dimed SA vs. LOG Commercial Properties | Dimed SA vs. Ambipar Participaes e | Dimed SA vs. SLC Agrcola SA |
| Movida Participaes vs. Petro Rio SA | Movida Participaes vs. Localiza Rent a | Movida Participaes vs. Banco BTG Pactual | Movida Participaes vs. CVC Brasil Operadora |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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