Correlation Between CPFL Energia and Suzano SA
Can any of the company-specific risk be diversified away by investing in both CPFL Energia and Suzano 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 CPFL Energia and Suzano SA 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 Suzano SA, you can compare the effects of market volatilities on CPFL Energia and Suzano 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 CPFL Energia with a short position of Suzano SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of CPFL Energia and Suzano SA.
Diversification Opportunities for CPFL Energia and Suzano SA
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between CPFL and Suzano is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding CPFL Energia SA and Suzano SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Suzano SA 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 Suzano SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Suzano SA has no effect on the direction of CPFL Energia i.e., CPFL Energia and Suzano SA go up and down completely randomly.
Pair Corralation between CPFL Energia and Suzano SA
Assuming the 90 days trading horizon CPFL Energia SA is expected to generate 0.88 times more return on investment than Suzano SA. However, CPFL Energia SA is 1.14 times less risky than Suzano SA. It trades about 0.14 of its potential returns per unit of risk. Suzano SA is currently generating about -0.19 per unit of risk. If you would invest 3,324 in CPFL Energia SA on November 18, 2024 and sell it today you would earn a total of 116.00 from holding CPFL Energia SA or generate 3.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CPFL Energia SA vs. Suzano SA
Performance |
| Timeline |
| CPFL Energia SA |
| Suzano SA |
CPFL Energia and Suzano SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CPFL Energia and Suzano SA
The main advantage of trading using opposite CPFL Energia and Suzano SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CPFL Energia position performs unexpectedly, Suzano 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 Suzano SA will offset losses from the drop in Suzano SA's long position.| CPFL Energia vs. The Hartford Financial | CPFL Energia vs. NXP Semiconductors NV | CPFL Energia vs. Autohome | CPFL Energia vs. Check Point Software |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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