Correlation Between Suzano SA and BrasilAgro Companhia
Can any of the company-specific risk be diversified away by investing in both Suzano SA and BrasilAgro Companhia 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 Suzano SA and BrasilAgro Companhia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Suzano SA and BrasilAgro Companhia, you can compare the effects of market volatilities on Suzano SA and BrasilAgro Companhia 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 Suzano SA with a short position of BrasilAgro Companhia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Suzano SA and BrasilAgro Companhia.
Diversification Opportunities for Suzano SA and BrasilAgro Companhia
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Suzano and BrasilAgro is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Suzano SA and BrasilAgro Companhia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BrasilAgro Companhia and Suzano 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 Suzano SA are associated (or correlated) with BrasilAgro Companhia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BrasilAgro Companhia has no effect on the direction of Suzano SA i.e., Suzano SA and BrasilAgro Companhia go up and down completely randomly.
Pair Corralation between Suzano SA and BrasilAgro Companhia
Assuming the 90 days trading horizon Suzano SA is expected to generate 0.68 times more return on investment than BrasilAgro Companhia. However, Suzano SA is 1.46 times less risky than BrasilAgro Companhia. It trades about 0.16 of its potential returns per unit of risk. BrasilAgro Companhia is currently generating about -0.01 per unit of risk. If you would invest 5,509 in Suzano SA on September 2, 2024 and sell it today you would earn a total of 731.00 from holding Suzano SA or generate 13.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Suzano SA vs. BrasilAgro Companhia
Performance |
| Timeline |
| Suzano SA |
| BrasilAgro Companhia |
Suzano SA and BrasilAgro Companhia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Suzano SA and BrasilAgro Companhia
The main advantage of trading using opposite Suzano SA and BrasilAgro Companhia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Suzano SA position performs unexpectedly, BrasilAgro Companhia 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 BrasilAgro Companhia will offset losses from the drop in BrasilAgro Companhia's long position.The idea behind Suzano SA and BrasilAgro Companhia pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| BrasilAgro Companhia vs. Companhia Siderrgica Nacional | BrasilAgro Companhia vs. Cyrela Brazil Realty | BrasilAgro Companhia vs. Fras le SA | BrasilAgro Companhia vs. Energisa 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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