Correlation Between Irani Papel and Klabin SA

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

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

Diversification Opportunities for Irani Papel and Klabin SA

0.56

Correlation Coefficient

Irani Papel  Klabin SA

Very weak diversification

The 3 months correlation between Irani and Klabin is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Irani Papel e and Klabin SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Klabin SA and Irani Papel 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 Irani Papel e are associated (or correlated) with Klabin SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Klabin SA has no effect on the direction of Irani Papel i.e., Irani Papel and Klabin SA go up and down completely randomly.

Pair Corralation between Irani Papel and Klabin SA

Assuming the 90 days trading horizon Irani Papel e is expected to under-perform the Klabin SA. In addition to that, Irani Papel is 1.04 times more volatile than Klabin SA. It trades about -0.04 of its total potential returns per unit of risk. Klabin SA is currently generating about 0.0 per unit of volatility. If you would invest  377.00  in Klabin SA on May 6, 2025 and sell it today you would lose (2.00) from holding Klabin SA or give up 0.53% of portfolio value over 90 days.

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

Irani Papel e  vs.  Klabin SA

Irani Papel e

Risk-Adjusted Performance

Very Weak

Over the last 90 days Irani Papel e has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Irani Papel is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Klabin SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Klabin SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Klabin SA 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 Irani Papel and Klabin SA

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

The idea behind Irani Papel e and Klabin 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.