Correlation Between Companhia Energtica and Transmissora Aliana
Can any of the company-specific risk be diversified away by investing in both Companhia Energtica and Transmissora Aliana 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 Transmissora Aliana into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Companhia Energtica do and Transmissora Aliana de, you can compare the effects of market volatilities on Companhia Energtica and Transmissora Aliana 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 Transmissora Aliana. Check out your portfolio center. Please also check ongoing floating volatility patterns of Companhia Energtica and Transmissora Aliana.
Diversification Opportunities for Companhia Energtica and Transmissora Aliana
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Companhia and Transmissora is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Companhia Energtica do and Transmissora Aliana de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transmissora Aliana 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 do are associated (or correlated) with Transmissora Aliana. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transmissora Aliana has no effect on the direction of Companhia Energtica i.e., Companhia Energtica and Transmissora Aliana go up and down completely randomly.
Pair Corralation between Companhia Energtica and Transmissora Aliana
Assuming the 90 days trading horizon Companhia Energtica do is expected to under-perform the Transmissora Aliana. In addition to that, Companhia Energtica is 1.58 times more volatile than Transmissora Aliana de. It trades about -0.22 of its total potential returns per unit of risk. Transmissora Aliana de is currently generating about -0.09 per unit of volatility. If you would invest 1,155 in Transmissora Aliana de on September 12, 2024 and sell it today you would lose (23.00) from holding Transmissora Aliana de or give up 1.99% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Companhia Energtica do vs. Transmissora Aliana de
Performance |
| Timeline |
| Companhia Energtica |
| Transmissora Aliana |
Companhia Energtica and Transmissora Aliana Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Companhia Energtica and Transmissora Aliana
The main advantage of trading using opposite Companhia Energtica and Transmissora Aliana positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Companhia Energtica position performs unexpectedly, Transmissora Aliana 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 Transmissora Aliana will offset losses from the drop in Transmissora Aliana's long position.| Companhia Energtica vs. CPFL Energia SA | Companhia Energtica vs. Light SA | Companhia Energtica vs. Eneva SA | Companhia Energtica vs. Companhia de Gs |
| Transmissora Aliana vs. Transmissora Aliana de | Transmissora Aliana vs. Klabin SA | Transmissora Aliana vs. Companhia de Saneamento | Transmissora Aliana vs. Transmissora Aliana 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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