Correlation Between Central Puerto and Equatorial Energia
Can any of the company-specific risk be diversified away by investing in both Central Puerto and Equatorial Energia 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 Central Puerto and Equatorial Energia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Central Puerto SA and Equatorial Energia SA, you can compare the effects of market volatilities on Central Puerto and Equatorial Energia 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 Central Puerto with a short position of Equatorial Energia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Central Puerto and Equatorial Energia.
Diversification Opportunities for Central Puerto and Equatorial Energia
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Central and Equatorial is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Central Puerto SA and Equatorial Energia SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equatorial Energia and Central Puerto 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 Central Puerto SA are associated (or correlated) with Equatorial Energia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equatorial Energia has no effect on the direction of Central Puerto i.e., Central Puerto and Equatorial Energia go up and down completely randomly.
Pair Corralation between Central Puerto and Equatorial Energia
Given the investment horizon of 90 days Central Puerto SA is expected to generate 1.1 times more return on investment than Equatorial Energia. However, Central Puerto is 1.1 times more volatile than Equatorial Energia SA. It trades about 0.08 of its potential returns per unit of risk. Equatorial Energia SA is currently generating about 0.02 per unit of risk. If you would invest 560.00 in Central Puerto SA on November 5, 2024 and sell it today you would earn a total of 892.00 from holding Central Puerto SA or generate 159.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 74.49% |
| Values | Daily Returns |
Central Puerto SA vs. Equatorial Energia SA
Performance |
| Timeline |
| Central Puerto SA |
| Equatorial Energia |
Central Puerto and Equatorial Energia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Central Puerto and Equatorial Energia
The main advantage of trading using opposite Central Puerto and Equatorial Energia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Central Puerto position performs unexpectedly, Equatorial Energia 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 Equatorial Energia will offset losses from the drop in Equatorial Energia's long position.| Central Puerto vs. Korea Electric Power | Central Puerto vs. Centrais Electricas Brasileiras | Central Puerto vs. MGE Energy | Central Puerto vs. IDACORP |
| Equatorial Energia vs. Dominion Energy | Equatorial Energia vs. Centrais Electricas Brasileiras | Equatorial Energia vs. Enel Chile SA | Equatorial Energia vs. Edison International |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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