Correlation Between CPFL Energia and Companhia Habitasul
Can any of the company-specific risk be diversified away by investing in both CPFL Energia and Companhia Habitasul 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 CPFL Energia and Companhia Habitasul into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CPFL Energia SA and Companhia Habitasul de, you can compare the effects of market volatilities on CPFL Energia and Companhia Habitasul 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 CPFL Energia with a short position of Companhia Habitasul. Check out your portfolio center. Please also check ongoing floating volatility patterns of CPFL Energia and Companhia Habitasul.
Diversification Opportunities for CPFL Energia and Companhia Habitasul
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between CPFL and Companhia is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding CPFL Energia SA and Companhia Habitasul de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Companhia Habitasul and CPFL Energia 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 CPFL Energia SA are associated (or correlated) with Companhia Habitasul. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Companhia Habitasul has no effect on the direction of CPFL Energia i.e., CPFL Energia and Companhia Habitasul go up and down completely randomly.
Pair Corralation between CPFL Energia and Companhia Habitasul
Assuming the 90 days trading horizon CPFL Energia SA is expected to generate 0.28 times more return on investment than Companhia Habitasul. However, CPFL Energia SA is 3.52 times less risky than Companhia Habitasul. It trades about -0.07 of its potential returns per unit of risk. Companhia Habitasul de is currently generating about -0.06 per unit of risk. If you would invest 3,281 in CPFL Energia SA on August 24, 2024 and sell it today you would lose (34.00) from holding CPFL Energia SA or give up 1.04% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CPFL Energia SA vs. Companhia Habitasul de
Performance |
| Timeline |
| CPFL Energia SA |
| Companhia Habitasul |
CPFL Energia and Companhia Habitasul Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CPFL Energia and Companhia Habitasul
The main advantage of trading using opposite CPFL Energia and Companhia Habitasul positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CPFL Energia position performs unexpectedly, Companhia Habitasul 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 Habitasul will offset losses from the drop in Companhia Habitasul's long position.| CPFL Energia vs. WEG SA | CPFL Energia vs. Automatic Data Processing | CPFL Energia vs. Atom Empreendimentos e | CPFL Energia vs. Neurocrine Biosciences |
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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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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