Correlation Between Trevisa Investimentos and Baumer SA

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

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

Diversification Opportunities for Trevisa Investimentos and Baumer SA

0.06

Correlation Coefficient

Trevisa Investimentos  Baumer SA

Significant diversification

The 3 months correlation between Trevisa and Baumer is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Trevisa Investimentos SA and Baumer SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baumer SA and Trevisa Investimentos 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 Trevisa Investimentos SA are associated (or correlated) with Baumer SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baumer SA has no effect on the direction of Trevisa Investimentos i.e., Trevisa Investimentos and Baumer SA go up and down completely randomly.

Pair Corralation between Trevisa Investimentos and Baumer SA

Assuming the 90 days trading horizon Trevisa Investimentos is expected to generate 259.78 times less return on investment than Baumer SA. But when comparing it to its historical volatility, Trevisa Investimentos SA is 2.45 times less risky than Baumer SA. It trades about 0.0 of its potential returns per unit of risk. Baumer SA is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  998.00  in Baumer SA on February 5, 2024 and sell it today you would earn a total of  49.00  from holding Baumer SA or generate 4.91% return on investment over 90 days.

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

Trevisa Investimentos SA  vs.  Baumer SA

Trevisa Investimentos

Risk-Adjusted Performance

0 of 100

Very Weak

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

Baumer SA

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Baumer SA are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Baumer SA 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 Trevisa Investimentos and Baumer SA

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

The idea behind Trevisa Investimentos SA and Baumer 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.

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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.