Correlation Between Companhia Energtica and So Carlos
Can any of the company-specific risk be diversified away by investing in both Companhia Energtica and So Carlos 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 Companhia Energtica and So Carlos into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Companhia Energtica de and So Carlos Empreendimentos, you can compare the effects of market volatilities on Companhia Energtica and So Carlos 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 Companhia Energtica with a short position of So Carlos. Check out your portfolio center. Please also check ongoing floating volatility patterns of Companhia Energtica and So Carlos.
Diversification Opportunities for Companhia Energtica and So Carlos
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Companhia and SCAR3 is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Companhia Energtica de and So Carlos Empreendimentos in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on So Carlos Empreendimentos and Companhia Energtica 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 Companhia Energtica de are associated (or correlated) with So Carlos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of So Carlos Empreendimentos has no effect on the direction of Companhia Energtica i.e., Companhia Energtica and So Carlos go up and down completely randomly.
Pair Corralation between Companhia Energtica and So Carlos
Assuming the 90 days trading horizon Companhia Energtica de is expected to generate 1.82 times more return on investment than So Carlos. However, Companhia Energtica is 1.82 times more volatile than So Carlos Empreendimentos. It trades about -0.11 of its potential returns per unit of risk. So Carlos Empreendimentos is currently generating about -0.31 per unit of risk. If you would invest 1,633 in Companhia Energtica de on September 1, 2024 and sell it today you would lose (101.00) from holding Companhia Energtica de or give up 6.18% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Companhia Energtica de vs. So Carlos Empreendimentos
Performance |
| Timeline |
| Companhia Energtica |
| So Carlos Empreendimentos |
Companhia Energtica and So Carlos Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Companhia Energtica and So Carlos
The main advantage of trading using opposite Companhia Energtica and So Carlos positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Companhia Energtica position performs unexpectedly, So Carlos 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 So Carlos will offset losses from the drop in So Carlos' long position.| Companhia Energtica vs. NextEra Energy | Companhia Energtica vs. Dominion Energy | Companhia Energtica vs. Transmissora Aliana de | Companhia Energtica vs. CPFL Energia SA |
| So Carlos vs. EZTEC Empreendimentos e | So Carlos vs. PBG SA | So Carlos vs. LPS Brasil | So Carlos vs. Tecnisa 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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