Correlation Between PPLA Participations and Tecnisa SA
Can any of the company-specific risk be diversified away by investing in both PPLA Participations and Tecnisa 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 PPLA Participations and Tecnisa SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PPLA Participations and Tecnisa SA, you can compare the effects of market volatilities on PPLA Participations and Tecnisa 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 PPLA Participations with a short position of Tecnisa SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of PPLA Participations and Tecnisa SA.
Diversification Opportunities for PPLA Participations and Tecnisa SA
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between PPLA and Tecnisa is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding PPLA Participations and Tecnisa SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tecnisa SA and PPLA Participations 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 PPLA Participations are associated (or correlated) with Tecnisa SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tecnisa SA has no effect on the direction of PPLA Participations i.e., PPLA Participations and Tecnisa SA go up and down completely randomly.
Pair Corralation between PPLA Participations and Tecnisa SA
Assuming the 90 days trading horizon PPLA Participations is expected to generate 1.21 times more return on investment than Tecnisa SA. However, PPLA Participations is 1.21 times more volatile than Tecnisa SA. It trades about -0.02 of its potential returns per unit of risk. Tecnisa SA is currently generating about -0.03 per unit of risk. If you would invest 500.00 in PPLA Participations on August 26, 2024 and sell it today you would lose (273.00) from holding PPLA Participations or give up 54.6% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.6% |
| Values | Daily Returns |
PPLA Participations vs. Tecnisa SA
Performance |
| Timeline |
| PPLA Participations |
| Tecnisa SA |
PPLA Participations and Tecnisa SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PPLA Participations and Tecnisa SA
The main advantage of trading using opposite PPLA Participations and Tecnisa SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PPLA Participations position performs unexpectedly, Tecnisa 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 Tecnisa SA will offset losses from the drop in Tecnisa SA's long position.| PPLA Participations vs. BTG Pactual Logstica | PPLA Participations vs. Plano Plano Desenvolvimento | PPLA Participations vs. Cable One | PPLA Participations vs. ATMA Participaes SA |
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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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