Correlation Between IDEXX Laboratories, and Paranapanema

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

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

Diversification Opportunities for IDEXX Laboratories, and Paranapanema

-0.36

Correlation Coefficient

IDEXX Laboratories,  Paranapanema

Very good diversification

The 3 months correlation between IDEXX and Paranapanema is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding IDEXX Laboratories, and Paranapanema SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Paranapanema SA and IDEXX Laboratories, 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 IDEXX Laboratories, are associated (or correlated) with Paranapanema. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Paranapanema SA has no effect on the direction of IDEXX Laboratories, i.e., IDEXX Laboratories, and Paranapanema go up and down completely randomly.

Pair Corralation between IDEXX Laboratories, and Paranapanema

Assuming the 90 days trading horizon IDEXX Laboratories, is expected to generate 0.55 times more return on investment than Paranapanema. However, IDEXX Laboratories, is 1.81 times less risky than Paranapanema. It trades about 0.22 of its potential returns per unit of risk. Paranapanema SA is currently generating about -0.13 per unit of risk. If you would invest  47,431  in IDEXX Laboratories, on April 25, 2025 and sell it today you would earn a total of  12,273  from holding IDEXX Laboratories, or generate 25.88% return on investment over 90 days.

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

IDEXX Laboratories,  vs.  Paranapanema SA

IDEXX Laboratories,

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in IDEXX Laboratories, are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental indicators, IDEXX Laboratories, sustained solid returns over the last few months and may actually be approaching a breakup point.

Paranapanema SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Paranapanema 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 IDEXX Laboratories, and Paranapanema

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

The idea behind IDEXX Laboratories, and Paranapanema 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.