Correlation Between Vale SA and Viscofan
Can any of the company-specific risk be diversified away by investing in both Vale SA and Viscofan 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 Vale SA and Viscofan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vale SA and Viscofan, you can compare the effects of market volatilities on Vale SA and Viscofan 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 Vale SA with a short position of Viscofan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vale SA and Viscofan.
Diversification Opportunities for Vale SA and Viscofan
Modest diversification
The 3 months correlation between Vale and Viscofan is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Vale SA and Viscofan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Viscofan and Vale 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 Vale SA are associated (or correlated) with Viscofan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Viscofan has no effect on the direction of Vale SA i.e., Vale SA and Viscofan go up and down completely randomly.
Pair Corralation between Vale SA and Viscofan
Assuming the 90 days trading horizon Vale SA is expected to under-perform the Viscofan. In addition to that, Vale SA is 1.91 times more volatile than Viscofan. It trades about -0.01 of its total potential returns per unit of risk. Viscofan is currently generating about 0.04 per unit of volatility. If you would invest 5,936 in Viscofan on November 2, 2024 and sell it today you would earn a total of 244.00 from holding Viscofan or generate 4.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.06% |
| Values | Daily Returns |
Vale SA vs. Viscofan
Performance |
| Timeline |
| Vale SA |
| Viscofan |
Vale SA and Viscofan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vale SA and Viscofan
The main advantage of trading using opposite Vale SA and Viscofan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vale SA position performs unexpectedly, Viscofan 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 Viscofan will offset losses from the drop in Viscofan's long position.| Vale SA vs. Ebro Foods | Vale SA vs. Inhome Prime Properties | Vale SA vs. Melia Hotels | Vale SA vs. Borges Agricultural Industrial |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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