Correlation Between Companhia Energtica and Cosan SA
Can any of the company-specific risk be diversified away by investing in both Companhia Energtica and Cosan SA 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 Cosan SA 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 Cosan SA, you can compare the effects of market volatilities on Companhia Energtica and Cosan SA 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 Cosan SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Companhia Energtica and Cosan SA.
Diversification Opportunities for Companhia Energtica and Cosan SA
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Companhia and Cosan is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Companhia Energtica de and Cosan SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cosan SA 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 Cosan SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cosan SA has no effect on the direction of Companhia Energtica i.e., Companhia Energtica and Cosan SA go up and down completely randomly.
Pair Corralation between Companhia Energtica and Cosan SA
Assuming the 90 days trading horizon Companhia Energtica de is expected to generate 0.89 times more return on investment than Cosan SA. However, Companhia Energtica de is 1.13 times less risky than Cosan SA. It trades about 0.1 of its potential returns per unit of risk. Cosan SA is currently generating about -0.1 per unit of risk. If you would invest 967.00 in Companhia Energtica de on August 24, 2024 and sell it today you would earn a total of 192.00 from holding Companhia Energtica de or generate 19.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Companhia Energtica de vs. Cosan SA
Performance |
| Timeline |
| Companhia Energtica |
| Cosan SA |
Companhia Energtica and Cosan SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Companhia Energtica and Cosan SA
The main advantage of trading using opposite Companhia Energtica and Cosan SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Companhia Energtica position performs unexpectedly, Cosan SA 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 Cosan SA will offset losses from the drop in Cosan SA's long position.| Companhia Energtica vs. CTEEP Companhia | Companhia Energtica vs. CPFL Energia SA | Companhia Energtica vs. BTG Pactual Logstica | Companhia Energtica vs. Plano Plano Desenvolvimento |
| Cosan SA vs. Braskem SA | Cosan SA vs. Cyrela Brazil Realty | Cosan SA vs. CCR SA | Cosan SA vs. Lojas Renner 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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