Correlation Between Suzano SA and Itasa Investimentos
Can any of the company-specific risk be diversified away by investing in both Suzano SA and Itasa Investimentos 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 Itasa Investimentos into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Suzano SA and Itasa Investimentos, you can compare the effects of market volatilities on Suzano SA and Itasa Investimentos 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 Itasa Investimentos. Check out your portfolio center. Please also check ongoing floating volatility patterns of Suzano SA and Itasa Investimentos.
Diversification Opportunities for Suzano SA and Itasa Investimentos
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Suzano and Itasa is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Suzano SA and Itasa Investimentos in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Itasa Investimentos 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 Itasa Investimentos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Itasa Investimentos has no effect on the direction of Suzano SA i.e., Suzano SA and Itasa Investimentos go up and down completely randomly.
Pair Corralation between Suzano SA and Itasa Investimentos
Assuming the 90 days trading horizon Suzano SA is expected to generate 1.57 times less return on investment than Itasa Investimentos. In addition to that, Suzano SA is 1.38 times more volatile than Itasa Investimentos. It trades about 0.03 of its total potential returns per unit of risk. Itasa Investimentos is currently generating about 0.06 per unit of volatility. If you would invest 716.00 in Itasa Investimentos on August 24, 2024 and sell it today you would earn a total of 304.00 from holding Itasa Investimentos or generate 42.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.0% |
| Values | Daily Returns |
Suzano SA vs. Itasa Investimentos
Performance |
| Timeline |
| Suzano SA |
| Itasa Investimentos |
Suzano SA and Itasa Investimentos Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Suzano SA and Itasa Investimentos
The main advantage of trading using opposite Suzano SA and Itasa Investimentos positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Suzano SA position performs unexpectedly, Itasa Investimentos 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 Itasa Investimentos will offset losses from the drop in Itasa Investimentos' long position.The idea behind Suzano SA and Itasa Investimentos 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.| Itasa Investimentos vs. Banco Santander SA | Itasa Investimentos vs. Banco do Estado | Itasa Investimentos vs. Banco do Estado | Itasa Investimentos vs. Banco da Amaznia |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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