Correlation Between Ita Unibanco and Alupar Investimento

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

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

Diversification Opportunities for Ita Unibanco and Alupar Investimento

0.41

Correlation Coefficient

Ita Unibanco  Alupar Investimento

Very weak diversification

The 3 months correlation between Ita and Alupar is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Ita Unibanco Holding and Alupar Investimento SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alupar Investimento and Ita Unibanco 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 Ita Unibanco Holding are associated (or correlated) with Alupar Investimento. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alupar Investimento has no effect on the direction of Ita Unibanco i.e., Ita Unibanco and Alupar Investimento go up and down completely randomly.

Pair Corralation between Ita Unibanco and Alupar Investimento

Assuming the 90 days trading horizon Ita Unibanco is expected to generate 1.73 times less return on investment than Alupar Investimento. But when comparing it to its historical volatility, Ita Unibanco Holding is 1.48 times less risky than Alupar Investimento. It trades about 0.03 of its potential returns per unit of risk. Alupar Investimento SA is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1,010  in Alupar Investimento SA on April 24, 2025 and sell it today you would earn a total of  29.00  from holding Alupar Investimento SA or generate 2.87% return on investment over 90 days.

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

Ita Unibanco Holding  vs.  Alupar Investimento SA

Ita Unibanco Holding

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ita Unibanco Holding are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Ita Unibanco is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Alupar Investimento

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Alupar Investimento SA are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Alupar Investimento 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 Ita Unibanco and Alupar Investimento

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

The idea behind Ita Unibanco Holding and Alupar Investimento 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.