Correlation Between Alpargatas and Target

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

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

Diversification Opportunities for Alpargatas and Target

-0.06

Correlation Coefficient

Alpargatas  Target

Good diversification

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

Pair Corralation between Alpargatas and Target

Assuming the 90 days trading horizon Alpargatas SA is expected to under-perform the Target. In addition to that, Alpargatas is 1.24 times more volatile than Target. It trades about -0.14 of its total potential returns per unit of risk. Target is currently generating about 0.13 per unit of volatility. If you would invest  54,922  in Target on April 13, 2025 and sell it today you would earn a total of  3,119  from holding Target or generate 5.68% return on investment over 90 days.

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

Alpargatas SA  vs.  Target

Alpargatas SA

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Alpargatas SA are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Alpargatas may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Target

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Target are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Target may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Alpargatas and Target

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

The idea behind Alpargatas SA and Target 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.