Correlation Between Santos Brasil and Aeris Indstria
Can any of the company-specific risk be diversified away by investing in both Santos Brasil and Aeris Indstria 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 Santos Brasil and Aeris Indstria into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Santos Brasil Participaes and Aeris Indstria e, you can compare the effects of market volatilities on Santos Brasil and Aeris Indstria 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 Santos Brasil with a short position of Aeris Indstria. Check out your portfolio center. Please also check ongoing floating volatility patterns of Santos Brasil and Aeris Indstria.
Diversification Opportunities for Santos Brasil and Aeris Indstria
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Santos and Aeris is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Santos Brasil Participaes and Aeris Indstria e in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aeris Indstria e and Santos Brasil 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 Santos Brasil Participaes are associated (or correlated) with Aeris Indstria. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aeris Indstria e has no effect on the direction of Santos Brasil i.e., Santos Brasil and Aeris Indstria go up and down completely randomly.
Pair Corralation between Santos Brasil and Aeris Indstria
Assuming the 90 days trading horizon Santos Brasil is expected to generate 40.7 times less return on investment than Aeris Indstria. But when comparing it to its historical volatility, Santos Brasil Participaes is 26.05 times less risky than Aeris Indstria. It trades about 0.06 of its potential returns per unit of risk. Aeris Indstria e is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 2,320 in Aeris Indstria e on November 2, 2024 and sell it today you would lose (1,663) from holding Aeris Indstria e or give up 71.68% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Santos Brasil Participaes vs. Aeris Indstria e
Performance |
| Timeline |
| Santos Brasil Participaes |
| Aeris Indstria e |
Santos Brasil and Aeris Indstria Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Santos Brasil and Aeris Indstria
The main advantage of trading using opposite Santos Brasil and Aeris Indstria positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Santos Brasil position performs unexpectedly, Aeris Indstria 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 Aeris Indstria will offset losses from the drop in Aeris Indstria's long position.| Santos Brasil vs. Trane Technologies plc | Santos Brasil vs. Agilent Technologies | Santos Brasil vs. Unity Software | Santos Brasil vs. Roper Technologies, |
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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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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