Correlation Between SIMPAR SA and Alfa Holdings
Can any of the company-specific risk be diversified away by investing in both SIMPAR SA and Alfa Holdings 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 SIMPAR SA and Alfa Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SIMPAR SA and Alfa Holdings SA, you can compare the effects of market volatilities on SIMPAR SA and Alfa Holdings 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 SIMPAR SA with a short position of Alfa Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of SIMPAR SA and Alfa Holdings.
Diversification Opportunities for SIMPAR SA and Alfa Holdings
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between SIMPAR and Alfa is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding SIMPAR SA and Alfa Holdings SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alfa Holdings SA and SIMPAR SA 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 SIMPAR SA are associated (or correlated) with Alfa Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alfa Holdings SA has no effect on the direction of SIMPAR SA i.e., SIMPAR SA and Alfa Holdings go up and down completely randomly.
Pair Corralation between SIMPAR SA and Alfa Holdings
Assuming the 90 days trading horizon SIMPAR SA is expected to generate 0.95 times more return on investment than Alfa Holdings. However, SIMPAR SA is 1.05 times less risky than Alfa Holdings. It trades about 0.12 of its potential returns per unit of risk. Alfa Holdings SA is currently generating about -0.28 per unit of risk. If you would invest 341.00 in SIMPAR SA on November 1, 2024 and sell it today you would earn a total of 23.00 from holding SIMPAR SA or generate 6.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
SIMPAR SA vs. Alfa Holdings SA
Performance |
| Timeline |
| SIMPAR SA |
| Alfa Holdings SA |
SIMPAR SA and Alfa Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SIMPAR SA and Alfa Holdings
The main advantage of trading using opposite SIMPAR SA and Alfa Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SIMPAR SA position performs unexpectedly, Alfa Holdings 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 Alfa Holdings will offset losses from the drop in Alfa Holdings' long position.| SIMPAR SA vs. Ambipar Participaes e | SIMPAR SA vs. Vamos Locao de | SIMPAR SA vs. Movida Participaes SA | SIMPAR SA vs. Petro Rio SA |
| Alfa Holdings vs. Alfa Holdings SA | Alfa Holdings vs. Alfa Holdings SA | Alfa Holdings vs. Banco Alfa de | Alfa Holdings vs. Financeira Alfa SA |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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