Correlation Between Plano Plano and BICE11

Can any of the company-specific risk be diversified away by investing in both Plano Plano and BICE11 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 BICE11 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 BICE11, you can compare the effects of market volatilities on Plano Plano and BICE11 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 BICE11. Check out your portfolio center. Please also check ongoing floating volatility patterns of Plano Plano and BICE11.

Diversification Opportunities for Plano Plano and BICE11

0.79

Correlation Coefficient

Plano Plano  BICE11

Poor diversification

The 3 months correlation between Plano and BICE11 is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Plano Plano Desenvolvimento and BICE11 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BICE11 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 BICE11. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BICE11 has no effect on the direction of Plano Plano i.e., Plano Plano and BICE11 go up and down completely randomly.

Pair Corralation between Plano Plano and BICE11

Assuming the 90 days trading horizon Plano Plano Desenvolvimento is expected to generate 25.77 times more return on investment than BICE11. However, Plano Plano is 25.77 times more volatile than BICE11. It trades about 0.09 of its potential returns per unit of risk. BICE11 is currently generating about 0.24 per unit of risk. If you would invest  1,166  in Plano Plano Desenvolvimento on April 23, 2025 and sell it today you would earn a total of  159.00  from holding Plano Plano Desenvolvimento or generate 13.64% return on investment over 90 days.

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

Plano Plano Desenvolvimento  vs.  BICE11

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 6 (%) 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.

BICE11

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in BICE11 are ranked lower than 18 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat strong fundamental indicators, BICE11 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Plano Plano and BICE11

The main advantage of trading using opposite Plano Plano and BICE11 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Plano Plano position performs unexpectedly, BICE11 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 BICE11 will offset losses from the drop in BICE11's long position.

The idea behind Plano Plano Desenvolvimento and BICE11 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.