Correlation Between AES and Companhia Paranaense
Can any of the company-specific risk be diversified away by investing in both AES and Companhia Paranaense 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 AES and Companhia Paranaense into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The AES and Companhia Paranaense de, you can compare the effects of market volatilities on AES and Companhia Paranaense 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 AES with a short position of Companhia Paranaense. Check out your portfolio center. Please also check ongoing floating volatility patterns of AES and Companhia Paranaense.
Diversification Opportunities for AES and Companhia Paranaense
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between AES and Companhia is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding The AES and Companhia Paranaense de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Companhia Paranaense and AES 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 The AES are associated (or correlated) with Companhia Paranaense. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Companhia Paranaense has no effect on the direction of AES i.e., AES and Companhia Paranaense go up and down completely randomly.
Pair Corralation between AES and Companhia Paranaense
Considering the 90-day investment horizon The AES is expected to under-perform the Companhia Paranaense. In addition to that, AES is 1.19 times more volatile than Companhia Paranaense de. It trades about -0.32 of its total potential returns per unit of risk. Companhia Paranaense de is currently generating about 0.28 per unit of volatility. If you would invest 530.00 in Companhia Paranaense de on November 3, 2024 and sell it today you would earn a total of 58.00 from holding Companhia Paranaense de or generate 10.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
The AES vs. Companhia Paranaense de
Performance |
| Timeline |
| AES |
| Companhia Paranaense |
AES and Companhia Paranaense Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AES and Companhia Paranaense
The main advantage of trading using opposite AES and Companhia Paranaense positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AES position performs unexpectedly, Companhia Paranaense 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 Paranaense will offset losses from the drop in Companhia Paranaense's long position.The idea behind The AES and Companhia Paranaense de 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.| Companhia Paranaense vs. FactSet Research Systems | Companhia Paranaense vs. Bowhead Specialty Holdings | Companhia Paranaense vs. Essent Group | Companhia Paranaense vs. Conifer Holdings, 975 |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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