Correlation Between Raia Drogasil and Grendene
Can any of the company-specific risk be diversified away by investing in both Raia Drogasil and Grendene 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 Raia Drogasil and Grendene into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Raia Drogasil SA and Grendene SA, you can compare the effects of market volatilities on Raia Drogasil and Grendene 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 Raia Drogasil with a short position of Grendene. Check out your portfolio center. Please also check ongoing floating volatility patterns of Raia Drogasil and Grendene.
Diversification Opportunities for Raia Drogasil and Grendene
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Raia and Grendene is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Raia Drogasil SA and Grendene SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grendene SA and Raia Drogasil 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 Raia Drogasil SA are associated (or correlated) with Grendene. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grendene SA has no effect on the direction of Raia Drogasil i.e., Raia Drogasil and Grendene go up and down completely randomly.
Pair Corralation between Raia Drogasil and Grendene
Assuming the 90 days trading horizon Raia Drogasil is expected to generate 1.17 times less return on investment than Grendene. But when comparing it to its historical volatility, Raia Drogasil SA is 1.4 times less risky than Grendene. It trades about 0.03 of its potential returns per unit of risk. Grendene SA is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 459.00 in Grendene SA on September 4, 2024 and sell it today you would earn a total of 56.00 from holding Grendene SA or generate 12.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Raia Drogasil SA vs. Grendene SA
Performance |
| Timeline |
| Raia Drogasil SA |
| Grendene SA |
Raia Drogasil and Grendene Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Raia Drogasil and Grendene
The main advantage of trading using opposite Raia Drogasil and Grendene positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Raia Drogasil position performs unexpectedly, Grendene 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 Grendene will offset losses from the drop in Grendene's long position.| Raia Drogasil vs. JBS SA | Raia Drogasil vs. Marfrig Global Foods | Raia Drogasil vs. Ambev SA | Raia Drogasil vs. Ita Unibanco Holding |
| Grendene vs. M Dias Branco | Grendene vs. Fleury SA | Grendene vs. Engie Brasil Energia | Grendene vs. Odontoprev SA |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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