Correlation Between Odontoprev and Profarma Distribuidora

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

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

Diversification Opportunities for Odontoprev and Profarma Distribuidora

0.36

Correlation Coefficient

Odontoprev  Profarma Distribuidora

Weak diversification

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

Pair Corralation between Odontoprev and Profarma Distribuidora

Assuming the 90 days trading horizon Odontoprev SA is expected to generate 0.71 times more return on investment than Profarma Distribuidora. However, Odontoprev SA is 1.41 times less risky than Profarma Distribuidora. It trades about 0.08 of its potential returns per unit of risk. Profarma Distribuidora de is currently generating about 0.03 per unit of risk. If you would invest  1,065  in Odontoprev SA on April 24, 2025 and sell it today you would earn a total of  78.00  from holding Odontoprev SA or generate 7.32% return on investment over 90 days.

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

Odontoprev SA  vs.  Profarma Distribuidora de

Odontoprev SA

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Odontoprev SA are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Odontoprev may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Profarma Distribuidora

Risk-Adjusted Performance

Insignificant

Over the last 90 days Profarma Distribuidora de has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Profarma Distribuidora 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 Odontoprev and Profarma Distribuidora

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

The idea behind Odontoprev SA and Profarma Distribuidora de 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.