Correlation Between BB Seguridade and Itasa Investimentos

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

By analyzing existing cross correlation between BB Seguridade Participacoes and Itasa Investimentos, you can compare the effects of market volatilities on BB Seguridade and Itasa Investimentos 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 BB Seguridade with a short position of Itasa Investimentos. Check out your portfolio center. Please also check ongoing floating volatility patterns of BB Seguridade and Itasa Investimentos.

Diversification Opportunities for BB Seguridade and Itasa Investimentos

0.91

Correlation Coefficient

BB Seguridade  Itasa Investimentos

Almost no diversification

The 3 months correlation between BBSEY and Itasa is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding BB Seguridade Participacoes and Itasa Investimentos in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Itasa Investimentos and BB Seguridade 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 BB Seguridade Participacoes are associated (or correlated) with Itasa Investimentos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Itasa Investimentos has no effect on the direction of BB Seguridade i.e., BB Seguridade and Itasa Investimentos go up and down completely randomly.

Pair Corralation between BB Seguridade and Itasa Investimentos

Assuming the 90 days horizon BB Seguridade Participacoes is expected to under-perform the Itasa Investimentos. In addition to that, BB Seguridade is 1.22 times more volatile than Itasa Investimentos. It trades about -0.04 of its total potential returns per unit of risk. Itasa Investimentos is currently generating about -0.03 per unit of volatility. If you would invest  1,129  in Itasa Investimentos on May 20, 2025 and sell it today you would lose (26.00) from holding Itasa Investimentos or give up 2.3% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	96.88%
Values	Daily Returns

BB Seguridade Participacoes  vs.  Itasa Investimentos

BB Seguridade Partic

Risk-Adjusted Performance

Weakest

Over the last 90 days BB Seguridade Participacoes has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical and fundamental indicators, BB Seguridade is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Itasa Investimentos

Risk-Adjusted Performance

Weakest

Over the last 90 days Itasa Investimentos has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Itasa Investimentos 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 BB Seguridade and Itasa Investimentos

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

The idea behind BB Seguridade Participacoes and Itasa Investimentos 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.