Correlation Between Gafisa SA and PDG Realty

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

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

Diversification Opportunities for Gafisa SA and PDG Realty

0.82

Correlation Coefficient

Gafisa SA  PDG Realty

Very poor diversification

The 3 months correlation between Gafisa and PDG is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Gafisa SA and PDG Realty SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PDG Realty SA and Gafisa SA 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 Gafisa SA are associated (or correlated) with PDG Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PDG Realty SA has no effect on the direction of Gafisa SA i.e., Gafisa SA and PDG Realty go up and down completely randomly.

Pair Corralation between Gafisa SA and PDG Realty

Assuming the 90 days trading horizon Gafisa SA is expected to generate 0.58 times more return on investment than PDG Realty. However, Gafisa SA is 1.72 times less risky than PDG Realty. It trades about -0.24 of its potential returns per unit of risk. PDG Realty SA is currently generating about -0.23 per unit of risk. If you would invest  3,300  in Gafisa SA on April 23, 2025 and sell it today you would lose (1,608) from holding Gafisa SA or give up 48.73% of portfolio value over 90 days.

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

Gafisa SA  vs.  PDG Realty SA

Gafisa SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Gafisa SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in August 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

PDG Realty SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days PDG Realty SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in August 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Gafisa SA and PDG Realty

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

The idea behind Gafisa SA and PDG Realty 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 Transaction History module to view history of all your transactions and understand their impact on performance.