Correlation Between Companhia Energtica and EVN AG
Can any of the company-specific risk be diversified away by investing in both Companhia Energtica and EVN AG 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 EVN AG 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 EVN AG, you can compare the effects of market volatilities on Companhia Energtica and EVN AG 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 EVN AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Companhia Energtica and EVN AG.
Diversification Opportunities for Companhia Energtica and EVN AG
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Companhia and EVN is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Companhia Energtica de and EVN AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EVN AG 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 EVN AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EVN AG has no effect on the direction of Companhia Energtica i.e., Companhia Energtica and EVN AG go up and down completely randomly.
Pair Corralation between Companhia Energtica and EVN AG
Assuming the 90 days horizon Companhia Energtica de is expected to generate 0.39 times more return on investment than EVN AG. However, Companhia Energtica de is 2.55 times less risky than EVN AG. It trades about 0.04 of its potential returns per unit of risk. EVN AG is currently generating about -0.1 per unit of risk. If you would invest 184.00 in Companhia Energtica de on September 13, 2024 and sell it today you would earn a total of 1.00 from holding Companhia Energtica de or generate 0.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Companhia Energtica de vs. EVN AG
Performance |
| Timeline |
| Companhia Energtica |
| EVN AG |
Companhia Energtica and EVN AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Companhia Energtica and EVN AG
The main advantage of trading using opposite Companhia Energtica and EVN AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Companhia Energtica position performs unexpectedly, EVN AG 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 EVN AG will offset losses from the drop in EVN AG's long position.| Companhia Energtica vs. TITANIUM TRANSPORTGROUP | Companhia Energtica vs. TRAINLINE PLC LS | Companhia Energtica vs. Gaztransport Technigaz SA | Companhia Energtica vs. INSURANCE AUST GRP |
| EVN AG vs. Western Copper and | EVN AG vs. BRIT AMER TOBACCO | EVN AG vs. MCEWEN MINING INC | EVN AG vs. Perseus Mining Limited |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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