Correlation Between TRAINLINE PLC and Companhia Energética
Can any of the company-specific risk be diversified away by investing in both TRAINLINE PLC and Companhia Energética 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 TRAINLINE PLC and Companhia Energética into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TRAINLINE PLC LS and Companhia Energtica de, you can compare the effects of market volatilities on TRAINLINE PLC and Companhia Energética 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 TRAINLINE PLC with a short position of Companhia Energética. Check out your portfolio center. Please also check ongoing floating volatility patterns of TRAINLINE PLC and Companhia Energética.
Diversification Opportunities for TRAINLINE PLC and Companhia Energética
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between TRAINLINE and Companhia is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding TRAINLINE PLC LS and Companhia Energtica de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Companhia Energética and TRAINLINE PLC 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 TRAINLINE PLC LS are associated (or correlated) with Companhia Energética. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Companhia Energética has no effect on the direction of TRAINLINE PLC i.e., TRAINLINE PLC and Companhia Energética go up and down completely randomly.
Pair Corralation between TRAINLINE PLC and Companhia Energética
Assuming the 90 days trading horizon TRAINLINE PLC is expected to generate 4.95 times less return on investment than Companhia Energética. But when comparing it to its historical volatility, TRAINLINE PLC LS is 1.03 times less risky than Companhia Energética. It trades about 0.02 of its potential returns per unit of risk. Companhia Energtica de is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 112.00 in Companhia Energtica de on December 4, 2024 and sell it today you would earn a total of 70.00 from holding Companhia Energtica de or generate 62.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
TRAINLINE PLC LS vs. Companhia Energtica de
Performance |
| Timeline |
| TRAINLINE PLC LS |
| Companhia Energética |
TRAINLINE PLC and Companhia Energética Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TRAINLINE PLC and Companhia Energética
The main advantage of trading using opposite TRAINLINE PLC and Companhia Energética positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TRAINLINE PLC position performs unexpectedly, Companhia Energética 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 Companhia Energética will offset losses from the drop in Companhia Energética's long position.| TRAINLINE PLC vs. Schweizer Electronic AG | TRAINLINE PLC vs. UET United Electronic | TRAINLINE PLC vs. Wyndham Hotels Resorts | TRAINLINE PLC vs. Richardson Electronics |
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Check out your portfolio center.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 Transaction History module to view history of all your transactions and understand their impact on performance.
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