Correlation Between BB Seguridade and Centrais Eltricas
Can any of the company-specific risk be diversified away by investing in both BB Seguridade and Centrais Eltricas 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 Centrais Eltricas 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 Centrais Eltricas Brasileiras, you can compare the effects of market volatilities on BB Seguridade and Centrais Eltricas 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 Centrais Eltricas. Check out your portfolio center. Please also check ongoing floating volatility patterns of BB Seguridade and Centrais Eltricas.
Diversification Opportunities for BB Seguridade and Centrais Eltricas
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between BBSE3 and Centrais is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding BB Seguridade Participacoes and Centrais Eltricas Brasileiras in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centrais Eltricas 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 Centrais Eltricas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Centrais Eltricas has no effect on the direction of BB Seguridade i.e., BB Seguridade and Centrais Eltricas go up and down completely randomly.
Pair Corralation between BB Seguridade and Centrais Eltricas
Assuming the 90 days trading horizon BB Seguridade Participacoes is expected to generate 0.73 times more return on investment than Centrais Eltricas. However, BB Seguridade Participacoes is 1.37 times less risky than Centrais Eltricas. It trades about -0.14 of its potential returns per unit of risk. Centrais Eltricas Brasileiras is currently generating about -0.17 per unit of risk. If you would invest 3,550 in BB Seguridade Participacoes on August 30, 2024 and sell it today you would lose (189.00) from holding BB Seguridade Participacoes or give up 5.32% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
BB Seguridade Participacoes vs. Centrais Eltricas Brasileiras
Performance |
| Timeline |
| BB Seguridade Partic |
| Centrais Eltricas |
BB Seguridade and Centrais Eltricas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BB Seguridade and Centrais Eltricas
The main advantage of trading using opposite BB Seguridade and Centrais Eltricas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BB Seguridade position performs unexpectedly, Centrais Eltricas 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 Centrais Eltricas will offset losses from the drop in Centrais Eltricas' long position.| BB Seguridade vs. Cogna Educao SA | BB Seguridade vs. CVC Brasil Operadora | BB Seguridade vs. Oi SA | BB Seguridade vs. Azul SA |
| Centrais Eltricas vs. Centrais Eltricas Brasileiras | Centrais Eltricas vs. Companhia Energtica de | Centrais Eltricas vs. Companhia de Saneamento | Centrais Eltricas vs. Braskem SA |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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