Correlation Between So Carlos and PBG SA
Can any of the company-specific risk be diversified away by investing in both So Carlos and PBG 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 So Carlos and PBG SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between So Carlos Empreendimentos and PBG SA, you can compare the effects of market volatilities on So Carlos and PBG 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 So Carlos with a short position of PBG SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of So Carlos and PBG SA.
Diversification Opportunities for So Carlos and PBG SA
Poor diversification
The 3 months correlation between SCAR3 and PBG is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding So Carlos Empreendimentos and PBG SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PBG SA and So Carlos 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 So Carlos Empreendimentos are associated (or correlated) with PBG SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PBG SA has no effect on the direction of So Carlos i.e., So Carlos and PBG SA go up and down completely randomly.
Pair Corralation between So Carlos and PBG SA
Assuming the 90 days trading horizon So Carlos Empreendimentos is expected to under-perform the PBG SA. But the stock apears to be less risky and, when comparing its historical volatility, So Carlos Empreendimentos is 3.01 times less risky than PBG SA. The stock trades about -0.31 of its potential returns per unit of risk. The PBG SA is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 418.00 in PBG SA on September 1, 2024 and sell it today you would lose (1.00) from holding PBG SA or give up 0.24% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.24% |
| Values | Daily Returns |
So Carlos Empreendimentos vs. PBG SA
Performance |
| Timeline |
| So Carlos Empreendimentos |
| PBG SA |
So Carlos and PBG SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with So Carlos and PBG SA
The main advantage of trading using opposite So Carlos and PBG SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if So Carlos position performs unexpectedly, PBG 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 PBG SA will offset losses from the drop in PBG SA's long position.| So Carlos vs. EZTEC Empreendimentos e | So Carlos vs. PBG SA | So Carlos vs. LPS Brasil | So Carlos vs. Tecnisa SA |
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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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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