Correlation Between Cruzeiro and CM Hospitalar

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

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

Diversification Opportunities for Cruzeiro and CM Hospitalar

0.22

Correlation Coefficient

Cruzeiro  CM Hospitalar

Modest diversification

The 3 months correlation between Cruzeiro and VVEO3 is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Cruzeiro do Sul and CM Hospitalar SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CM Hospitalar SA and Cruzeiro 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 Cruzeiro do Sul are associated (or correlated) with CM Hospitalar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CM Hospitalar SA has no effect on the direction of Cruzeiro i.e., Cruzeiro and CM Hospitalar go up and down completely randomly.

Pair Corralation between Cruzeiro and CM Hospitalar

Assuming the 90 days trading horizon Cruzeiro do Sul is expected to generate 0.69 times more return on investment than CM Hospitalar. However, Cruzeiro do Sul is 1.44 times less risky than CM Hospitalar. It trades about 0.2 of its potential returns per unit of risk. CM Hospitalar SA is currently generating about -0.02 per unit of risk. If you would invest  365.00  in Cruzeiro do Sul on April 20, 2025 and sell it today you would earn a total of  120.00  from holding Cruzeiro do Sul or generate 32.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

Cruzeiro do Sul  vs.  CM Hospitalar SA

Cruzeiro do Sul

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Cruzeiro do Sul are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Cruzeiro unveiled solid returns over the last few months and may actually be approaching a breakup point.

CM Hospitalar SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days CM Hospitalar SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, CM Hospitalar 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 Cruzeiro and CM Hospitalar

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

The idea behind Cruzeiro do Sul and CM Hospitalar 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..