Correlation Between Conduril Engenharia and Semapa

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

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

Diversification Opportunities for Conduril Engenharia and Semapa

0.52

Correlation Coefficient

Conduril Engenharia  Semapa

Very weak diversification

The 3 months correlation between Conduril and Semapa is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Conduril Engenharia and Semapa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Semapa and Conduril Engenharia 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 Conduril Engenharia are associated (or correlated) with Semapa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Semapa has no effect on the direction of Conduril Engenharia i.e., Conduril Engenharia and Semapa go up and down completely randomly.

Pair Corralation between Conduril Engenharia and Semapa

Assuming the 90 days trading horizon Conduril Engenharia is expected to generate 10.83 times more return on investment than Semapa. However, Conduril Engenharia is 10.83 times more volatile than Semapa. It trades about 0.06 of its potential returns per unit of risk. Semapa is currently generating about 0.05 per unit of risk. If you would invest  2,620  in Conduril Engenharia on January 26, 2024 and sell it today you would earn a total of  100.00  from holding Conduril Engenharia or generate 3.82% return on investment over 90 days.

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

Conduril Engenharia  vs.  Semapa

Conduril Engenharia

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Conduril Engenharia are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Conduril Engenharia unveiled solid returns over the last few months and may actually be approaching a breakup point.

Semapa

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Semapa are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain primary indicators, Semapa may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pair Trading with Conduril Engenharia and Semapa

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

The idea behind Conduril Engenharia and Semapa 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 Global Correlations module to find global opportunities by holding instruments from different markets.