Correlation Between Cable One and Energisa
Can any of the company-specific risk be diversified away by investing in both Cable One and Energisa 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 Cable One and Energisa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cable One and Energisa SA, you can compare the effects of market volatilities on Cable One and Energisa 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 Cable One with a short position of Energisa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cable One and Energisa.
Diversification Opportunities for Cable One and Energisa
Excellent diversification
The 3 months correlation between Cable and Energisa is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Cable One and Energisa SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Energisa SA and Cable One 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 Cable One are associated (or correlated) with Energisa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Energisa SA has no effect on the direction of Cable One i.e., Cable One and Energisa go up and down completely randomly.
Pair Corralation between Cable One and Energisa
Assuming the 90 days trading horizon Cable One is expected to generate 1.14 times more return on investment than Energisa. However, Cable One is 1.14 times more volatile than Energisa SA. It trades about 0.44 of its potential returns per unit of risk. Energisa SA is currently generating about -0.05 per unit of risk. If you would invest 986.00 in Cable One on August 27, 2024 and sell it today you would earn a total of 187.00 from holding Cable One or generate 18.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cable One vs. Energisa SA
Performance |
| Timeline |
| Cable One |
| Energisa SA |
Cable One and Energisa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cable One and Energisa
The main advantage of trading using opposite Cable One and Energisa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cable One position performs unexpectedly, Energisa 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 Energisa will offset losses from the drop in Energisa's long position.| Cable One vs. Monster Beverage | Cable One vs. Cognizant Technology Solutions | Cable One vs. Palantir Technologies | Cable One vs. Paycom Software |
| Energisa vs. Centrais Eltricas Brasileiras | Energisa vs. Companhia Energtica de | Energisa vs. Companhia de Saneamento | Energisa vs. Companhia Siderrgica Nacional |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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