Correlation Between Companhia Energtica and Companhiade Eletricidade
Can any of the company-specific risk be diversified away by investing in both Companhia Energtica and Companhiade Eletricidade 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 Companhiade Eletricidade 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 Companhiade Eletricidade do, you can compare the effects of market volatilities on Companhia Energtica and Companhiade Eletricidade 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 Companhiade Eletricidade. Check out your portfolio center. Please also check ongoing floating volatility patterns of Companhia Energtica and Companhiade Eletricidade.
Diversification Opportunities for Companhia Energtica and Companhiade Eletricidade
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Companhia and Companhiade is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Companhia Energtica de and Companhiade Eletricidade do in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Companhiade Eletricidade 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 Companhiade Eletricidade. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Companhiade Eletricidade has no effect on the direction of Companhia Energtica i.e., Companhia Energtica and Companhiade Eletricidade go up and down completely randomly.
Pair Corralation between Companhia Energtica and Companhiade Eletricidade
Assuming the 90 days trading horizon Companhia Energtica de is expected to generate 0.88 times more return on investment than Companhiade Eletricidade. However, Companhia Energtica de is 1.14 times less risky than Companhiade Eletricidade. It trades about 0.07 of its potential returns per unit of risk. Companhiade Eletricidade do is currently generating about 0.03 per unit of risk. If you would invest 1,026 in Companhia Energtica de on September 4, 2024 and sell it today you would earn a total of 673.00 from holding Companhia Energtica de or generate 65.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 89.89% |
| Values | Daily Returns |
Companhia Energtica de vs. Companhiade Eletricidade do
Performance |
| Timeline |
| Companhia Energtica |
| Companhiade Eletricidade |
Companhia Energtica and Companhiade Eletricidade Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Companhia Energtica and Companhiade Eletricidade
The main advantage of trading using opposite Companhia Energtica and Companhiade Eletricidade positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Companhia Energtica position performs unexpectedly, Companhiade Eletricidade 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 Companhiade Eletricidade will offset losses from the drop in Companhiade Eletricidade's long position.| Companhia Energtica vs. Companhia Energtica de | Companhia Energtica vs. Companhia Energtica de | Companhia Energtica vs. Empresa Metropolitana de | Companhia Energtica vs. Bradespar SA |
| Companhiade Eletricidade vs. Banco BTG Pactual | Companhiade Eletricidade vs. Cosan SA | Companhiade Eletricidade vs. Banco Pan SA | Companhiade Eletricidade vs. Equatorial Energia 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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