Correlation Between Guararapes Confeces and Grazziotin

Can any of the company-specific risk be diversified away by investing in both Guararapes Confeces and Grazziotin 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 Guararapes Confeces and Grazziotin into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Guararapes Confeces SA and Grazziotin SA, you can compare the effects of market volatilities on Guararapes Confeces and Grazziotin 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 Guararapes Confeces with a short position of Grazziotin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guararapes Confeces and Grazziotin.

Diversification Opportunities for Guararapes Confeces and Grazziotin

0.44

Correlation Coefficient

Guararapes Confeces  Grazziotin

Very weak diversification

The 3 months correlation between Guararapes and Grazziotin is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Guararapes Confeces SA and Grazziotin SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grazziotin SA and Guararapes Confeces 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 Guararapes Confeces SA are associated (or correlated) with Grazziotin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grazziotin SA has no effect on the direction of Guararapes Confeces i.e., Guararapes Confeces and Grazziotin go up and down completely randomly.

Pair Corralation between Guararapes Confeces and Grazziotin

Assuming the 90 days trading horizon Guararapes Confeces SA is expected to generate 2.2 times more return on investment than Grazziotin. However, Guararapes Confeces is 2.2 times more volatile than Grazziotin SA. It trades about 0.18 of its potential returns per unit of risk. Grazziotin SA is currently generating about 0.0 per unit of risk. If you would invest  504.00  in Guararapes Confeces SA on February 19, 2024 and sell it today you would earn a total of  269.00  from holding Guararapes Confeces SA or generate 53.37% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Guararapes Confeces SA  vs.  Grazziotin SA

Guararapes Confeces

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Guararapes Confeces SA are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Guararapes Confeces unveiled solid returns over the last few months and may actually be approaching a breakup point.

Grazziotin SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Grazziotin SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Grazziotin is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Guararapes Confeces and Grazziotin

The main advantage of trading using opposite Guararapes Confeces and Grazziotin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guararapes Confeces position performs unexpectedly, Grazziotin 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 Grazziotin will offset losses from the drop in Grazziotin's long position.

The idea behind Guararapes Confeces SA and Grazziotin SA 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.

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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 Equity Valuation module to check real value of public entities based on technical and fundamental data.