Correlation Between Companhia and BB Seguridade
Can any of the company-specific risk be diversified away by investing in both Companhia and BB Seguridade 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 BB Seguridade 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 BB Seguridade Participacoes, you can compare the effects of market volatilities on Companhia and BB Seguridade 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 BB Seguridade. Check out your portfolio center. Please also check ongoing floating volatility patterns of Companhia and BB Seguridade.
Diversification Opportunities for Companhia and BB Seguridade
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Companhia and BBSE3 is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Companhia de Saneamento and BB Seguridade Participacoes in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BB Seguridade Partic 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 BB Seguridade. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BB Seguridade Partic has no effect on the direction of Companhia i.e., Companhia and BB Seguridade go up and down completely randomly.
Pair Corralation between Companhia and BB Seguridade
Assuming the 90 days trading horizon Companhia de Saneamento is expected to generate 1.59 times more return on investment than BB Seguridade. However, Companhia is 1.59 times more volatile than BB Seguridade Participacoes. It trades about 0.23 of its potential returns per unit of risk. BB Seguridade Participacoes is currently generating about -0.03 per unit of risk. If you would invest 9,173 in Companhia de Saneamento on August 28, 2024 and sell it today you would earn a total of 717.00 from holding Companhia de Saneamento or generate 7.82% 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. BB Seguridade Participacoes
Performance |
| Timeline |
| Companhia de Saneamento |
| BB Seguridade Partic |
Companhia and BB Seguridade Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Companhia and BB Seguridade
The main advantage of trading using opposite Companhia and BB Seguridade positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Companhia position performs unexpectedly, BB Seguridade 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 BB Seguridade will offset losses from the drop in BB Seguridade's long position.| Companhia vs. CCR SA | Companhia vs. Centrais Eltricas Brasileiras | Companhia vs. Companhia Energtica de | Companhia vs. Centrais Eltricas Brasileiras |
| BB Seguridade vs. Transmissora Aliana de | BB Seguridade vs. Banco do Brasil | BB Seguridade vs. Itasa Investimentos | BB Seguridade vs. Engie Brasil Energia |
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 Stocks Directory module to find actively traded stocks across global markets.
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