Correlation Between Santos Brasil and Livetech
Can any of the company-specific risk be diversified away by investing in both Santos Brasil and Livetech 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 Livetech 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 Livetech da Bahia, you can compare the effects of market volatilities on Santos Brasil and Livetech 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 Livetech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Santos Brasil and Livetech.
Diversification Opportunities for Santos Brasil and Livetech
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Santos and Livetech is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Santos Brasil Participaes and Livetech da Bahia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Livetech da Bahia 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 Livetech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Livetech da Bahia has no effect on the direction of Santos Brasil i.e., Santos Brasil and Livetech go up and down completely randomly.
Pair Corralation between Santos Brasil and Livetech
Assuming the 90 days trading horizon Santos Brasil Participaes is expected to generate 0.92 times more return on investment than Livetech. However, Santos Brasil Participaes is 1.08 times less risky than Livetech. It trades about 0.04 of its potential returns per unit of risk. Livetech da Bahia is currently generating about -0.05 per unit of risk. If you would invest 1,161 in Santos Brasil Participaes on September 3, 2024 and sell it today you would earn a total of 121.00 from holding Santos Brasil Participaes or generate 10.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Santos Brasil Participaes vs. Livetech da Bahia
Performance |
| Timeline |
| Santos Brasil Participaes |
| Livetech da Bahia |
Santos Brasil and Livetech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Santos Brasil and Livetech
The main advantage of trading using opposite Santos Brasil and Livetech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Santos Brasil position performs unexpectedly, Livetech 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 Livetech will offset losses from the drop in Livetech's long position.| Santos Brasil vs. Metalurgica Gerdau SA | Santos Brasil vs. Healthpeak Properties | Santos Brasil vs. Micron Technology | Santos Brasil vs. Align Technology |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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