Correlation Between Companhia and Companhia Energtica
Can any of the company-specific risk be diversified away by investing in both Companhia and Companhia Energtica 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 and Companhia Energtica into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Companhia de Saneamento and Companhia Energtica de, you can compare the effects of market volatilities on Companhia and Companhia Energtica 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 with a short position of Companhia Energtica. Check out your portfolio center. Please also check ongoing floating volatility patterns of Companhia and Companhia Energtica.
Diversification Opportunities for Companhia and Companhia Energtica
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Companhia and Companhia is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Companhia de Saneamento and Companhia Energtica de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Companhia Energtica and Companhia 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 de Saneamento are associated (or correlated) with Companhia Energtica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Companhia Energtica has no effect on the direction of Companhia i.e., Companhia and Companhia Energtica go up and down completely randomly.
Pair Corralation between Companhia and Companhia Energtica
Assuming the 90 days trading horizon Companhia is expected to generate 1.08 times less return on investment than Companhia Energtica. In addition to that, Companhia is 1.14 times more volatile than Companhia Energtica de. It trades about 0.1 of its total potential returns per unit of risk. Companhia Energtica de is currently generating about 0.12 per unit of volatility. If you would invest 1,507 in Companhia Energtica de on November 28, 2024 and sell it today you would earn a total of 61.00 from holding Companhia Energtica de or generate 4.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Companhia de Saneamento vs. Companhia Energtica de
Performance |
| Timeline |
| Companhia de Saneamento |
| Companhia Energtica |
Companhia and Companhia Energtica Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Companhia and Companhia Energtica
The main advantage of trading using opposite Companhia and Companhia Energtica positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Companhia position performs unexpectedly, Companhia Energtica 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 Energtica will offset losses from the drop in Companhia Energtica's long position.| Companhia vs. CTEEP Companhia | Companhia vs. Companhia de Saneamento | Companhia vs. Companhia Paranaense de | Companhia vs. Companhia de Saneamento |
| Companhia Energtica vs. Companhia Energtica de | Companhia Energtica vs. Centrais Eltricas Brasileiras | Companhia Energtica vs. Centrais Eltricas Brasileiras | Companhia Energtica vs. Companhia de Saneamento |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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