Correlation Between Bradespar and Companhia Energtica
Can any of the company-specific risk be diversified away by investing in both Bradespar and Companhia Energtica 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 Bradespar and Companhia Energtica into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bradespar SA and Companhia Energtica de, you can compare the effects of market volatilities on Bradespar and Companhia Energtica 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 Bradespar with a short position of Companhia Energtica. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bradespar and Companhia Energtica.
Diversification Opportunities for Bradespar and Companhia Energtica
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Bradespar and Companhia is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Bradespar SA and Companhia Energtica de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Companhia Energtica and Bradespar 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 Bradespar SA are associated (or correlated) with Companhia Energtica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Companhia Energtica has no effect on the direction of Bradespar i.e., Bradespar and Companhia Energtica go up and down completely randomly.
Pair Corralation between Bradespar and Companhia Energtica
Assuming the 90 days trading horizon Bradespar SA is expected to under-perform the Companhia Energtica. But the stock apears to be less risky and, when comparing its historical volatility, Bradespar SA is 1.27 times less risky than Companhia Energtica. The stock trades about -0.01 of its potential returns per unit of risk. The Companhia Energtica de is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 809.00 in Companhia Energtica de on September 4, 2024 and sell it today you would earn a total of 842.00 from holding Companhia Energtica de or generate 104.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Bradespar SA vs. Companhia Energtica de
Performance |
| Timeline |
| Bradespar SA |
| Companhia Energtica |
Bradespar and Companhia Energtica Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bradespar and Companhia Energtica
The main advantage of trading using opposite Bradespar and Companhia Energtica positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bradespar position performs unexpectedly, Companhia Energtica 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 Energtica will offset losses from the drop in Companhia Energtica's long position.| Bradespar vs. Bradespar SA | Bradespar vs. Metalurgica Gerdau SA | Bradespar vs. Banco Bradesco SA | Bradespar vs. Companhia Paranaense de |
| Companhia Energtica vs. Companhia Energtica de | Companhia Energtica vs. Companhia Energtica de | Companhia Energtica vs. Companhiade Eletricidade do | Companhia Energtica vs. Empresa Metropolitana de |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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