Correlation Between VTEX and Zenvia
Can any of the company-specific risk be diversified away by investing in both VTEX and Zenvia 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 VTEX and Zenvia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VTEX and Zenvia Inc, you can compare the effects of market volatilities on VTEX and Zenvia 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 VTEX with a short position of Zenvia. Check out your portfolio center. Please also check ongoing floating volatility patterns of VTEX and Zenvia.
Diversification Opportunities for VTEX and Zenvia
Poor diversification
The 3 months correlation between VTEX and Zenvia is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding VTEX and Zenvia Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zenvia Inc and VTEX 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 VTEX are associated (or correlated) with Zenvia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zenvia Inc has no effect on the direction of VTEX i.e., VTEX and Zenvia go up and down completely randomly.
Pair Corralation between VTEX and Zenvia
Given the investment horizon of 90 days VTEX is expected to under-perform the Zenvia. But the stock apears to be less risky and, when comparing its historical volatility, VTEX is 3.39 times less risky than Zenvia. The stock trades about -0.19 of its potential returns per unit of risk. The Zenvia Inc is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 139.00 in Zenvia Inc on August 27, 2024 and sell it today you would earn a total of 1.00 from holding Zenvia Inc or generate 0.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
VTEX vs. Zenvia Inc
Performance |
| Timeline |
| VTEX |
| Zenvia Inc |
VTEX and Zenvia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VTEX and Zenvia
The main advantage of trading using opposite VTEX and Zenvia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VTEX position performs unexpectedly, Zenvia 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 Zenvia will offset losses from the drop in Zenvia's long position.The idea behind VTEX and Zenvia Inc 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.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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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