Correlation Between Porto Seguro and Cyrela Brazil

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

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

Diversification Opportunities for Porto Seguro and Cyrela Brazil

0.42

Correlation Coefficient

Porto Seguro  Cyrela Brazil

Very weak diversification

The 3 months correlation between Porto and Cyrela is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Porto Seguro SA and Cyrela Brazil Realty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cyrela Brazil Realty and Porto Seguro 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 Porto Seguro SA are associated (or correlated) with Cyrela Brazil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cyrela Brazil Realty has no effect on the direction of Porto Seguro i.e., Porto Seguro and Cyrela Brazil go up and down completely randomly.

Pair Corralation between Porto Seguro and Cyrela Brazil

Assuming the 90 days trading horizon Porto Seguro SA is expected to generate 0.9 times more return on investment than Cyrela Brazil. However, Porto Seguro SA is 1.12 times less risky than Cyrela Brazil. It trades about 0.22 of its potential returns per unit of risk. Cyrela Brazil Realty is currently generating about 0.0 per unit of risk. If you would invest  4,148  in Porto Seguro SA on April 24, 2025 and sell it today you would earn a total of  1,012  from holding Porto Seguro SA or generate 24.4% return on investment over 90 days.

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

Porto Seguro SA  vs.  Cyrela Brazil Realty

Porto Seguro SA

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Porto Seguro SA are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Porto Seguro unveiled solid returns over the last few months and may actually be approaching a breakup point.

Cyrela Brazil Realty

Risk-Adjusted Performance

Insignificant

Over the last 90 days Cyrela Brazil Realty has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Cyrela Brazil 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 Porto Seguro and Cyrela Brazil

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

The idea behind Porto Seguro SA and Cyrela Brazil Realty 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.