Correlation Between Companhia Paranaense and Centrais Eltricas
Can any of the company-specific risk be diversified away by investing in both Companhia Paranaense 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 Paranaense 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 Paranaense de and Centrais Eltricas de, you can compare the effects of market volatilities on Companhia Paranaense 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 Paranaense with a short position of Centrais Eltricas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Companhia Paranaense and Centrais Eltricas.
Diversification Opportunities for Companhia Paranaense and Centrais Eltricas
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Companhia and Centrais is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Companhia Paranaense de and Centrais Eltricas de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centrais Eltricas and Companhia Paranaense 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 Paranaense 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 Paranaense i.e., Companhia Paranaense and Centrais Eltricas go up and down completely randomly.
Pair Corralation between Companhia Paranaense and Centrais Eltricas
Assuming the 90 days trading horizon Companhia Paranaense de is expected to generate 2.59 times more return on investment than Centrais Eltricas. However, Companhia Paranaense is 2.59 times more volatile than Centrais Eltricas de. It trades about 0.2 of its potential returns per unit of risk. Centrais Eltricas de is currently generating about 0.1 per unit of risk. If you would invest 862.00 in Companhia Paranaense de on November 29, 2024 and sell it today you would earn a total of 51.00 from holding Companhia Paranaense de or generate 5.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Companhia Paranaense de vs. Centrais Eltricas de
Performance |
| Timeline |
| Companhia Paranaense |
| Centrais Eltricas |
Companhia Paranaense and Centrais Eltricas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Companhia Paranaense and Centrais Eltricas
The main advantage of trading using opposite Companhia Paranaense and Centrais Eltricas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Companhia Paranaense 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 Paranaense vs. Companhia Paranaense de | Companhia Paranaense vs. Companhia de Saneamento | Companhia Paranaense vs. CTEEP Companhia | Companhia Paranaense vs. Companhia Energtica de |
| Centrais Eltricas vs. Companhia Energtica do | Centrais Eltricas vs. Light SA | Centrais Eltricas vs. Alupar Investimento SA | Centrais Eltricas vs. Equatorial Energia 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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