Correlation Between Companhia Siderrgica and Companhia Energtica
Can any of the company-specific risk be diversified away by investing in both Companhia Siderrgica 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 Siderrgica 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 Siderrgica Nacional and Companhia Energtica de, you can compare the effects of market volatilities on Companhia Siderrgica 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 Siderrgica with a short position of Companhia Energtica. Check out your portfolio center. Please also check ongoing floating volatility patterns of Companhia Siderrgica and Companhia Energtica.
Diversification Opportunities for Companhia Siderrgica and Companhia Energtica
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Companhia and Companhia is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Companhia Siderrgica Nacional 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 Siderrgica 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 Siderrgica Nacional 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 Siderrgica i.e., Companhia Siderrgica and Companhia Energtica go up and down completely randomly.
Pair Corralation between Companhia Siderrgica and Companhia Energtica
Assuming the 90 days trading horizon Companhia Siderrgica is expected to generate 4.52 times less return on investment than Companhia Energtica. But when comparing it to its historical volatility, Companhia Siderrgica Nacional is 1.62 times less risky than Companhia Energtica. It trades about 0.02 of its potential returns per unit of risk. Companhia Energtica de is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 674.00 in Companhia Energtica de on August 23, 2024 and sell it today you would earn a total of 485.00 from holding Companhia Energtica de or generate 71.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.2% |
| Values | Daily Returns |
Companhia Siderrgica Nacional vs. Companhia Energtica de
Performance |
| Timeline |
| Companhia Siderrgica |
| Companhia Energtica |
Companhia Siderrgica and Companhia Energtica Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Companhia Siderrgica and Companhia Energtica
The main advantage of trading using opposite Companhia Siderrgica and Companhia Energtica positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Companhia Siderrgica 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 Siderrgica vs. Marcopolo SA | Companhia Siderrgica vs. Randon SA Implementos | Companhia Siderrgica vs. Positivo Tecnologia SA | Companhia Siderrgica vs. CCR SA |
| Companhia Energtica vs. CTEEP Companhia | Companhia Energtica vs. CPFL Energia SA | Companhia Energtica vs. BTG Pactual Logstica | Companhia Energtica vs. Plano Plano Desenvolvimento |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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