Correlation Between CVC Brasil and GAEC Educacao

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

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

Diversification Opportunities for CVC Brasil and GAEC Educacao

0.6

Correlation Coefficient

CVC Brasil  GAEC Educacao

Poor diversification

The 3 months correlation between CVC and GAEC is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding CVC Brasil Operadora and GAEC Educacao SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GAEC Educacao SA and CVC 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 CVC Brasil Operadora are associated (or correlated) with GAEC Educacao. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GAEC Educacao SA has no effect on the direction of CVC Brasil i.e., CVC Brasil and GAEC Educacao go up and down completely randomly.

Pair Corralation between CVC Brasil and GAEC Educacao

Assuming the 90 days trading horizon CVC Brasil is expected to generate 1.92 times less return on investment than GAEC Educacao. But when comparing it to its historical volatility, CVC Brasil Operadora is 1.12 times less risky than GAEC Educacao. It trades about 0.05 of its potential returns per unit of risk. GAEC Educacao SA is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  304.00  in GAEC Educacao SA on April 22, 2025 and sell it today you would earn a total of  62.00  from holding GAEC Educacao SA or generate 20.39% return on investment over 90 days.

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

CVC Brasil Operadora  vs.  GAEC Educacao SA

CVC Brasil Operadora

Risk-Adjusted Performance

Insignificant

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

GAEC Educacao SA

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in GAEC Educacao SA are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, GAEC Educacao unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CVC Brasil and GAEC Educacao

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

The idea behind CVC Brasil Operadora and GAEC Educacao 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.