Correlation Between Vasta PlatformLtd and Cogna Educacao

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

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

Diversification Opportunities for Vasta PlatformLtd and Cogna Educacao

0.08

Correlation Coefficient

Vasta PlatformLtd  Cogna Educacao

Significant diversification

The 3 months correlation between Vasta and Cogna is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Vasta PlatformLtd and Cogna Educacao SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cogna Educacao SA and Vasta PlatformLtd 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 Vasta PlatformLtd are associated (or correlated) with Cogna Educacao. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cogna Educacao SA has no effect on the direction of Vasta PlatformLtd i.e., Vasta PlatformLtd and Cogna Educacao go up and down completely randomly.

Pair Corralation between Vasta PlatformLtd and Cogna Educacao

Given the investment horizon of 90 days Vasta PlatformLtd is expected to under-perform the Cogna Educacao. But the stock apears to be less risky and, when comparing its historical volatility, Vasta PlatformLtd is 4.9 times less risky than Cogna Educacao. The stock trades about -0.22 of its potential returns per unit of risk. The Cogna Educacao SA is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  43.00  in Cogna Educacao SA on February 5, 2024 and sell it today you would earn a total of  7.00  from holding Cogna Educacao SA or generate 16.28% return on investment over 90 days.

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

Vasta PlatformLtd  vs.  Cogna Educacao SA

Vasta PlatformLtd

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vasta PlatformLtd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Vasta PlatformLtd is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Cogna Educacao SA

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Cogna Educacao SA are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Cogna Educacao showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Vasta PlatformLtd and Cogna Educacao

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

The idea behind Vasta PlatformLtd and Cogna Educacao 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.