Correlation Between Klabin SA and Lupatech

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

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

Diversification Opportunities for Klabin SA and Lupatech

-0.42

Correlation Coefficient

Klabin SA  Lupatech

Very good diversification

The 3 months correlation between Klabin and Lupatech is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Klabin SA and Lupatech SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lupatech SA and Klabin 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 Klabin SA are associated (or correlated) with Lupatech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lupatech SA has no effect on the direction of Klabin SA i.e., Klabin SA and Lupatech go up and down completely randomly.

Pair Corralation between Klabin SA and Lupatech

Assuming the 90 days trading horizon Klabin SA is expected to generate 0.44 times more return on investment than Lupatech. However, Klabin SA is 2.28 times less risky than Lupatech. It trades about -0.22 of its potential returns per unit of risk. Lupatech SA is currently generating about -0.55 per unit of risk. If you would invest  490.00  in Klabin SA on February 3, 2024 and sell it today you would lose (23.00) from holding Klabin SA or give up 4.69% of portfolio value over 90 days.

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

Klabin SA  vs.  Lupatech SA

Klabin SA

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Klabin SA are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Klabin SA may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Lupatech SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lupatech SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in June 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Klabin SA and Lupatech

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

The idea behind Klabin SA and Lupatech 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.