Correlation Between Oi SA and Cruzeiro

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

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

Diversification Opportunities for Oi SA and Cruzeiro

0.26

Correlation Coefficient

Oi SA  Cruzeiro

Modest diversification

The 3 months correlation between OIBR3 and Cruzeiro is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Oi SA and Cruzeiro do Sul in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cruzeiro do Sul and Oi 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 Oi SA are associated (or correlated) with Cruzeiro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cruzeiro do Sul has no effect on the direction of Oi SA i.e., Oi SA and Cruzeiro go up and down completely randomly.

Pair Corralation between Oi SA and Cruzeiro

Assuming the 90 days trading horizon Oi SA is expected to under-perform the Cruzeiro. In addition to that, Oi SA is 1.95 times more volatile than Cruzeiro do Sul. It trades about -0.03 of its total potential returns per unit of risk. Cruzeiro do Sul is currently generating about 0.2 per unit of volatility. If you would invest  365.00  in Cruzeiro do Sul on April 22, 2025 and sell it today you would earn a total of  120.00  from holding Cruzeiro do Sul or generate 32.88% return on investment over 90 days.

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

Oi SA  vs.  Cruzeiro do Sul

Oi SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Oi SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Cruzeiro do Sul

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Cruzeiro do Sul are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Cruzeiro unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Oi SA and Cruzeiro

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

The idea behind Oi SA and Cruzeiro do Sul 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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.