Correlation Between Plano Plano and Alpargatas

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

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

Diversification Opportunities for Plano Plano and Alpargatas

0.88

Correlation Coefficient

Plano Plano  Alpargatas

Very poor diversification

The 3 months correlation between Plano and Alpargatas is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Plano Plano Desenvolvimento and Alpargatas SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alpargatas SA and Plano Plano 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 Plano Plano Desenvolvimento are associated (or correlated) with Alpargatas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alpargatas SA has no effect on the direction of Plano Plano i.e., Plano Plano and Alpargatas go up and down completely randomly.

Pair Corralation between Plano Plano and Alpargatas

Assuming the 90 days trading horizon Plano Plano Desenvolvimento is expected to generate 1.03 times more return on investment than Alpargatas. However, Plano Plano is 1.03 times more volatile than Alpargatas SA. It trades about 0.11 of its potential returns per unit of risk. Alpargatas SA is currently generating about 0.03 per unit of risk. If you would invest  1,170  in Plano Plano Desenvolvimento on April 20, 2025 and sell it today you would earn a total of  205.00  from holding Plano Plano Desenvolvimento or generate 17.52% return on investment over 90 days.

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

Plano Plano Desenvolvimento  vs.  Alpargatas SA

Plano Plano Desenvol

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Plano Plano Desenvolvimento are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Plano Plano unveiled solid returns over the last few months and may actually be approaching a breakup point.

Alpargatas SA

Risk-Adjusted Performance

Weak

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

Pair Trading with Plano Plano and Alpargatas

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

The idea behind Plano Plano Desenvolvimento and Alpargatas 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.