Correlation Between Santos Brasil and Recrusul
Can any of the company-specific risk be diversified away by investing in both Santos Brasil and Recrusul 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 Recrusul 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 Recrusul SA, you can compare the effects of market volatilities on Santos Brasil and Recrusul 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 Recrusul. Check out your portfolio center. Please also check ongoing floating volatility patterns of Santos Brasil and Recrusul.
Diversification Opportunities for Santos Brasil and Recrusul
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Santos and Recrusul is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Santos Brasil Participaes and Recrusul SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Recrusul SA 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 Recrusul. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Recrusul SA has no effect on the direction of Santos Brasil i.e., Santos Brasil and Recrusul go up and down completely randomly.
Pair Corralation between Santos Brasil and Recrusul
Assuming the 90 days trading horizon Santos Brasil Participaes is expected to generate 0.04 times more return on investment than Recrusul. However, Santos Brasil Participaes is 24.36 times less risky than Recrusul. It trades about 0.27 of its potential returns per unit of risk. Recrusul SA is currently generating about -0.04 per unit of risk. If you would invest 1,259 in Santos Brasil Participaes on August 31, 2024 and sell it today you would earn a total of 24.00 from holding Santos Brasil Participaes or generate 1.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Santos Brasil Participaes vs. Recrusul SA
Performance |
| Timeline |
| Santos Brasil Participaes |
| Recrusul SA |
Santos Brasil and Recrusul Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Santos Brasil and Recrusul
The main advantage of trading using opposite Santos Brasil and Recrusul positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Santos Brasil position performs unexpectedly, Recrusul 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 Recrusul will offset losses from the drop in Recrusul's long position.| Santos Brasil vs. METISA Metalrgica Timboense | Santos Brasil vs. Lupatech SA | Santos Brasil vs. Fras le SA | Santos Brasil vs. Energisa SA |
| Recrusul vs. Fras le SA | Recrusul vs. PBG SA | Recrusul vs. Springs Global Participaes | Recrusul vs. Indstrias Romi 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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