Correlation Between Companhia and Klabin SA
Can any of the company-specific risk be diversified away by investing in both Companhia and Klabin SA 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 Companhia and Klabin SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Companhia de Saneamento and Klabin SA, you can compare the effects of market volatilities on Companhia and Klabin SA 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 Companhia with a short position of Klabin SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Companhia and Klabin SA.
Diversification Opportunities for Companhia and Klabin SA
Weak diversification
The 3 months correlation between Companhia and Klabin is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Companhia de Saneamento and Klabin SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Klabin SA and Companhia 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 Companhia de Saneamento are associated (or correlated) with Klabin SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Klabin SA has no effect on the direction of Companhia i.e., Companhia and Klabin SA go up and down completely randomly.
Pair Corralation between Companhia and Klabin SA
Assuming the 90 days trading horizon Companhia is expected to generate 1.6 times less return on investment than Klabin SA. In addition to that, Companhia is 1.11 times more volatile than Klabin SA. It trades about 0.02 of its total potential returns per unit of risk. Klabin SA is currently generating about 0.03 per unit of volatility. If you would invest 386.00 in Klabin SA on August 26, 2024 and sell it today you would earn a total of 40.00 from holding Klabin SA or generate 10.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Companhia de Saneamento vs. Klabin SA
Performance |
| Timeline |
| Companhia de Saneamento |
| Klabin SA |
Companhia and Klabin SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Companhia and Klabin SA
The main advantage of trading using opposite Companhia and Klabin SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Companhia position performs unexpectedly, Klabin SA 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 Klabin SA will offset losses from the drop in Klabin SA's long position.| Companhia vs. CTEEP Companhia | Companhia vs. BB Seguridade Participacoes | Companhia vs. Transmissora Aliana de | Companhia vs. Itasa Investimentos |
| Klabin SA vs. Metalurgica Gerdau SA | Klabin SA vs. Companhia Siderrgica Nacional | Klabin SA vs. Companhia Energtica de | Klabin SA vs. Companhia Paranaense de |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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