Correlation Between Centrais Eltricas and Companhia Paranaense
Can any of the company-specific risk be diversified away by investing in both Centrais Eltricas and Companhia Paranaense 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 Centrais Eltricas and Companhia Paranaense into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Centrais Eltricas de and Companhia Paranaense de, you can compare the effects of market volatilities on Centrais Eltricas and Companhia Paranaense 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 Centrais Eltricas with a short position of Companhia Paranaense. Check out your portfolio center. Please also check ongoing floating volatility patterns of Centrais Eltricas and Companhia Paranaense.
Diversification Opportunities for Centrais Eltricas and Companhia Paranaense
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Centrais and Companhia is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Centrais Eltricas de and Companhia Paranaense de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Companhia Paranaense and Centrais Eltricas 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 Centrais Eltricas de are associated (or correlated) with Companhia Paranaense. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Companhia Paranaense has no effect on the direction of Centrais Eltricas i.e., Centrais Eltricas and Companhia Paranaense go up and down completely randomly.
Pair Corralation between Centrais Eltricas and Companhia Paranaense
Assuming the 90 days trading horizon Centrais Eltricas is expected to generate 5.1 times less return on investment than Companhia Paranaense. But when comparing it to its historical volatility, Centrais Eltricas de is 2.59 times less risky than Companhia Paranaense. It trades about 0.1 of its potential returns per unit of risk. Companhia Paranaense de is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 862.00 in Companhia Paranaense de on November 29, 2024 and sell it today you would earn a total of 51.00 from holding Companhia Paranaense de or generate 5.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Centrais Eltricas de vs. Companhia Paranaense de
Performance |
| Timeline |
| Centrais Eltricas |
| Companhia Paranaense |
Centrais Eltricas and Companhia Paranaense Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Centrais Eltricas and Companhia Paranaense
The main advantage of trading using opposite Centrais Eltricas and Companhia Paranaense positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Centrais Eltricas position performs unexpectedly, Companhia Paranaense 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 Paranaense will offset losses from the drop in Companhia Paranaense's long position.| Centrais Eltricas vs. Companhia Energtica do | Centrais Eltricas vs. Light SA | Centrais Eltricas vs. Alupar Investimento SA | Centrais Eltricas vs. Equatorial Energia SA |
| Companhia Paranaense vs. Companhia Paranaense de | Companhia Paranaense vs. Companhia de Saneamento | Companhia Paranaense vs. CTEEP Companhia | Companhia Paranaense vs. Companhia Energtica de |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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