Correlation Between S1YM34 and PagSeguro Digital
Can any of the company-specific risk be diversified away by investing in both S1YM34 and PagSeguro Digital 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 S1YM34 and PagSeguro Digital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between S1YM34 and PagSeguro Digital, you can compare the effects of market volatilities on S1YM34 and PagSeguro Digital 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 S1YM34 with a short position of PagSeguro Digital. Check out your portfolio center. Please also check ongoing floating volatility patterns of S1YM34 and PagSeguro Digital.
Diversification Opportunities for S1YM34 and PagSeguro Digital
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between S1YM34 and PagSeguro is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding S1YM34 and PagSeguro Digital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PagSeguro Digital and S1YM34 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 S1YM34 are associated (or correlated) with PagSeguro Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PagSeguro Digital has no effect on the direction of S1YM34 i.e., S1YM34 and PagSeguro Digital go up and down completely randomly.
Pair Corralation between S1YM34 and PagSeguro Digital
Assuming the 90 days trading horizon S1YM34 is expected to generate 0.7 times more return on investment than PagSeguro Digital. However, S1YM34 is 1.43 times less risky than PagSeguro Digital. It trades about 0.05 of its potential returns per unit of risk. PagSeguro Digital is currently generating about 0.0 per unit of risk. If you would invest 11,914 in S1YM34 on September 26, 2024 and sell it today you would earn a total of 5,979 from holding S1YM34 or generate 50.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 98.8% |
| Values | Daily Returns |
S1YM34 vs. PagSeguro Digital
Performance |
| Timeline |
| S1YM34 |
| PagSeguro Digital |
S1YM34 and PagSeguro Digital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with S1YM34 and PagSeguro Digital
The main advantage of trading using opposite S1YM34 and PagSeguro Digital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if S1YM34 position performs unexpectedly, PagSeguro Digital 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 PagSeguro Digital will offset losses from the drop in PagSeguro Digital's long position.The idea behind S1YM34 and PagSeguro Digital pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| PagSeguro Digital vs. Adobe Inc | PagSeguro Digital vs. S1NP34 | PagSeguro Digital vs. Fortinet | PagSeguro Digital vs. Block Inc |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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