Correlation Between Companhia Energtica and Centrais Eltricas
Can any of the company-specific risk be diversified away by investing in both Companhia Energtica and Centrais Eltricas 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 Centrais Eltricas 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 Centrais Eltricas Brasileiras, you can compare the effects of market volatilities on Companhia Energtica and Centrais Eltricas 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 Centrais Eltricas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Companhia Energtica and Centrais Eltricas.
Diversification Opportunities for Companhia Energtica and Centrais Eltricas
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Companhia and Centrais is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Companhia Energtica de and Centrais Eltricas Brasileiras in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centrais Eltricas 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 Centrais Eltricas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Centrais Eltricas has no effect on the direction of Companhia Energtica i.e., Companhia Energtica and Centrais Eltricas go up and down completely randomly.
Pair Corralation between Companhia Energtica and Centrais Eltricas
Assuming the 90 days trading horizon Companhia Energtica de is expected to generate 2.75 times more return on investment than Centrais Eltricas. However, Companhia Energtica is 2.75 times more volatile than Centrais Eltricas Brasileiras. It trades about 0.04 of its potential returns per unit of risk. Centrais Eltricas Brasileiras is currently generating about -0.01 per unit of risk. If you would invest 815.00 in Companhia Energtica de on August 28, 2024 and sell it today you would earn a total of 362.00 from holding Companhia Energtica de or generate 44.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Companhia Energtica de vs. Centrais Eltricas Brasileiras
Performance |
| Timeline |
| Companhia Energtica |
| Centrais Eltricas |
Companhia Energtica and Centrais Eltricas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Companhia Energtica and Centrais Eltricas
The main advantage of trading using opposite Companhia Energtica and Centrais Eltricas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Companhia Energtica position performs unexpectedly, Centrais Eltricas 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 Centrais Eltricas will offset losses from the drop in Centrais Eltricas' long position.| Companhia Energtica vs. CTEEP Companhia | Companhia Energtica vs. BB Seguridade Participacoes | Companhia Energtica vs. Transmissora Aliana de | Companhia Energtica vs. Itasa Investimentos |
| Centrais Eltricas vs. Centrais Eltricas Brasileiras | Centrais Eltricas vs. Companhia Energtica de | Centrais Eltricas vs. Companhia de Saneamento | Centrais Eltricas vs. Companhia Siderrgica Nacional |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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