Correlation Between Parque Dom and LIFE CAPITAL

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

By analyzing existing cross correlation between Parque Dom Pedro and LIFE CAPITAL PARTNERS, you can compare the effects of market volatilities on Parque Dom and LIFE CAPITAL 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 Parque Dom with a short position of LIFE CAPITAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Parque Dom and LIFE CAPITAL.

Diversification Opportunities for Parque Dom and LIFE CAPITAL

0.79

Correlation Coefficient

Parque Dom  LIFE CAPITAL

Poor diversification

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

Pair Corralation between Parque Dom and LIFE CAPITAL

Assuming the 90 days trading horizon Parque Dom Pedro is expected to generate 1.28 times more return on investment than LIFE CAPITAL. However, Parque Dom is 1.28 times more volatile than LIFE CAPITAL PARTNERS. It trades about 0.16 of its potential returns per unit of risk. LIFE CAPITAL PARTNERS is currently generating about 0.11 per unit of risk. If you would invest  220,259  in Parque Dom Pedro on April 20, 2025 and sell it today you would earn a total of  26,477  from holding Parque Dom Pedro or generate 12.02% return on investment over 90 days.

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

Parque Dom Pedro  vs.  LIFE CAPITAL PARTNERS

Parque Dom Pedro

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Parque Dom Pedro are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat weak fundamental indicators, Parque Dom may actually be approaching a critical reversion point that can send shares even higher in August 2025.

LIFE CAPITAL PARTNERS

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in LIFE CAPITAL PARTNERS are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat strong technical and fundamental indicators, LIFE CAPITAL is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Parque Dom and LIFE CAPITAL

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

The idea behind Parque Dom Pedro and LIFE CAPITAL PARTNERS 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.