Correlation Between Refinaria and Livetech
Can any of the company-specific risk be diversified away by investing in both Refinaria and Livetech 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 Refinaria and Livetech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Refinaria de Petrleos and Livetech da Bahia, you can compare the effects of market volatilities on Refinaria and Livetech 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 Refinaria with a short position of Livetech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Refinaria and Livetech.
Diversification Opportunities for Refinaria and Livetech
Pay attention - limited upside
The 3 months correlation between Refinaria and Livetech is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Refinaria de Petrleos and Livetech da Bahia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Livetech da Bahia and Refinaria 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 Refinaria de Petrleos are associated (or correlated) with Livetech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Livetech da Bahia has no effect on the direction of Refinaria i.e., Refinaria and Livetech go up and down completely randomly.
Pair Corralation between Refinaria and Livetech
Assuming the 90 days trading horizon Refinaria de Petrleos is expected to generate 1.14 times more return on investment than Livetech. However, Refinaria is 1.14 times more volatile than Livetech da Bahia. It trades about 0.05 of its potential returns per unit of risk. Livetech da Bahia is currently generating about -0.05 per unit of risk. If you would invest 161.00 in Refinaria de Petrleos on November 30, 2024 and sell it today you would earn a total of 129.00 from holding Refinaria de Petrleos or generate 80.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Refinaria de Petrleos vs. Livetech da Bahia
Performance |
| Timeline |
| Refinaria de Petrleos |
| Livetech da Bahia |
Refinaria and Livetech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Refinaria and Livetech
The main advantage of trading using opposite Refinaria and Livetech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Refinaria position performs unexpectedly, Livetech 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 Livetech will offset losses from the drop in Livetech's long position.| Refinaria vs. Lupatech SA | Refinaria vs. Recrusul SA | Refinaria vs. PDG Realty SA | Refinaria vs. OSX Brasil SA |
| Livetech vs. Medical Properties Trust, | Livetech vs. salesforce inc | Livetech vs. Metalurgica Gerdau SA | Livetech vs. Brpr Corporate Offices |
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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