Correlation Between HEDGE Brasil and BB Seguridade

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

By analyzing existing cross correlation between HEDGE Brasil Shopping and BB Seguridade Participacoes, you can compare the effects of market volatilities on HEDGE Brasil and BB Seguridade 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 HEDGE Brasil with a short position of BB Seguridade. Check out your portfolio center. Please also check ongoing floating volatility patterns of HEDGE Brasil and BB Seguridade.

Diversification Opportunities for HEDGE Brasil and BB Seguridade

0.38

Correlation Coefficient

HEDGE Brasil  BB Seguridade

Weak diversification

The 3 months correlation between HEDGE and BBSE3 is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding HEDGE Brasil Shopping and BB Seguridade Participacoes in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BB Seguridade Partic and HEDGE Brasil 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 HEDGE Brasil Shopping are associated (or correlated) with BB Seguridade. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BB Seguridade Partic has no effect on the direction of HEDGE Brasil i.e., HEDGE Brasil and BB Seguridade go up and down completely randomly.

Pair Corralation between HEDGE Brasil and BB Seguridade

If you would invest  3,244  in BB Seguridade Participacoes on February 3, 2024 and sell it today you would lose (2.00) from holding BB Seguridade Participacoes or give up 0.06% of portfolio value over 90 days.

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

HEDGE Brasil Shopping  vs.  BB Seguridade Participacoes

HEDGE Brasil Shopping

Risk-Adjusted Performance

0 of 100

Very Weak

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

BB Seguridade Partic

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in BB Seguridade Participacoes are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, BB Seguridade is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with HEDGE Brasil and BB Seguridade

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

The idea behind HEDGE Brasil Shopping and BB Seguridade Participacoes 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.