Correlation Between Companhia Energetica and Companhia
Can any of the company-specific risk be diversified away by investing in both Companhia Energetica and Companhia 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 Energetica and Companhia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Companhia Energetica de and Companhia de Saneamento, you can compare the effects of market volatilities on Companhia Energetica and Companhia 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 Energetica with a short position of Companhia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Companhia Energetica and Companhia.
Diversification Opportunities for Companhia Energetica and Companhia
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Companhia and Companhia is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Companhia Energetica de and Companhia de Saneamento in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Companhia de Saneamento and Companhia Energetica 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 Energetica de are associated (or correlated) with Companhia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Companhia de Saneamento has no effect on the direction of Companhia Energetica i.e., Companhia Energetica and Companhia go up and down completely randomly.
Pair Corralation between Companhia Energetica and Companhia
Considering the 90-day investment horizon Companhia Energetica is expected to generate 1.81 times less return on investment than Companhia. In addition to that, Companhia Energetica is 1.14 times more volatile than Companhia de Saneamento. It trades about 0.07 of its total potential returns per unit of risk. Companhia de Saneamento is currently generating about 0.13 per unit of volatility. If you would invest 1,606 in Companhia de Saneamento on August 27, 2024 and sell it today you would earn a total of 84.00 from holding Companhia de Saneamento or generate 5.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Companhia Energetica de vs. Companhia de Saneamento
Performance |
| Timeline |
| Companhia Energetica |
| Companhia de Saneamento |
Companhia Energetica and Companhia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Companhia Energetica and Companhia
The main advantage of trading using opposite Companhia Energetica and Companhia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Companhia Energetica position performs unexpectedly, Companhia 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 Companhia will offset losses from the drop in Companhia's long position.| Companhia Energetica vs. NorthWestern | Companhia Energetica vs. Montauk Renewables | Companhia Energetica vs. Allete Inc | Companhia Energetica vs. Companhia Paranaense de |
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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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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