Correlation Between PBG SA and LPS Brasil
Can any of the company-specific risk be diversified away by investing in both PBG SA and LPS Brasil 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 PBG SA and LPS Brasil into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PBG SA and LPS Brasil , you can compare the effects of market volatilities on PBG SA and LPS Brasil 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 PBG SA with a short position of LPS Brasil. Check out your portfolio center. Please also check ongoing floating volatility patterns of PBG SA and LPS Brasil.
Diversification Opportunities for PBG SA and LPS Brasil
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between PBG and LPS is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding PBG SA and LPS Brasil in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LPS Brasil and PBG 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 PBG SA are associated (or correlated) with LPS Brasil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LPS Brasil has no effect on the direction of PBG SA i.e., PBG SA and LPS Brasil go up and down completely randomly.
Pair Corralation between PBG SA and LPS Brasil
Assuming the 90 days trading horizon PBG SA is expected to generate 2.5 times less return on investment than LPS Brasil. In addition to that, PBG SA is 1.18 times more volatile than LPS Brasil . It trades about 0.02 of its total potential returns per unit of risk. LPS Brasil is currently generating about 0.05 per unit of volatility. If you would invest 161.00 in LPS Brasil on September 1, 2024 and sell it today you would earn a total of 4.00 from holding LPS Brasil or generate 2.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PBG SA vs. LPS Brasil
Performance |
| Timeline |
| PBG SA |
| LPS Brasil |
PBG SA and LPS Brasil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PBG SA and LPS Brasil
The main advantage of trading using opposite PBG SA and LPS Brasil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PBG SA position performs unexpectedly, LPS Brasil 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 LPS Brasil will offset losses from the drop in LPS Brasil's long position.| PBG SA vs. METISA Metalrgica Timboense | PBG SA vs. Lupatech SA | PBG SA vs. Fras le SA | PBG SA vs. Energisa SA |
| LPS Brasil vs. Tecnisa SA | LPS Brasil vs. Marcopolo SA | LPS Brasil vs. T4F Entretenimento SA | LPS Brasil vs. Centro de Imagem |
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.
Other Complementary Tools
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios |