Correlation Between Raia Drogasil and Lojas Renner
Can any of the company-specific risk be diversified away by investing in both Raia Drogasil and Lojas Renner 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 Lojas Renner 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 Lojas Renner SA, you can compare the effects of market volatilities on Raia Drogasil and Lojas Renner 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 Lojas Renner. Check out your portfolio center. Please also check ongoing floating volatility patterns of Raia Drogasil and Lojas Renner.
Diversification Opportunities for Raia Drogasil and Lojas Renner
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Raia and Lojas is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Raia Drogasil SA and Lojas Renner SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lojas Renner 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 Lojas Renner. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lojas Renner SA has no effect on the direction of Raia Drogasil i.e., Raia Drogasil and Lojas Renner go up and down completely randomly.
Pair Corralation between Raia Drogasil and Lojas Renner
Assuming the 90 days trading horizon Raia Drogasil SA is expected to generate 0.65 times more return on investment than Lojas Renner. However, Raia Drogasil SA is 1.54 times less risky than Lojas Renner. It trades about 0.09 of its potential returns per unit of risk. Lojas Renner SA is currently generating about -0.25 per unit of risk. If you would invest 2,465 in Raia Drogasil SA on August 24, 2024 and sell it today you would earn a total of 72.00 from holding Raia Drogasil SA or generate 2.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Raia Drogasil SA vs. Lojas Renner SA
Performance |
| Timeline |
| Raia Drogasil SA |
| Lojas Renner SA |
Raia Drogasil and Lojas Renner Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Raia Drogasil and Lojas Renner
The main advantage of trading using opposite Raia Drogasil and Lojas Renner positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Raia Drogasil position performs unexpectedly, Lojas Renner 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 Lojas Renner will offset losses from the drop in Lojas Renner's long position.| Raia Drogasil vs. Minerva SA | Raia Drogasil vs. BRF SA | Raia Drogasil vs. Companhia Siderrgica Nacional | Raia Drogasil vs. Cyrela Brazil Realty |
| Lojas Renner vs. WEG SA | Lojas Renner vs. Localiza Rent a | Lojas Renner vs. Raia Drogasil SA | Lojas Renner vs. Ambev 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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