Correlation Between CP ALL and Centrais Electricas
Can any of the company-specific risk be diversified away by investing in both CP ALL and Centrais Electricas 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 CP ALL and Centrais Electricas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CP ALL Public and Centrais Electricas Brasileiras, you can compare the effects of market volatilities on CP ALL and Centrais Electricas 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 CP ALL with a short position of Centrais Electricas. Check out your portfolio center. Please also check ongoing floating volatility patterns of CP ALL and Centrais Electricas.
Diversification Opportunities for CP ALL and Centrais Electricas
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between CVPBF and Centrais is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding CP ALL Public and Centrais Electricas Brasileira in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centrais Electricas and CP ALL 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 CP ALL Public are associated (or correlated) with Centrais Electricas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Centrais Electricas has no effect on the direction of CP ALL i.e., CP ALL and Centrais Electricas go up and down completely randomly.
Pair Corralation between CP ALL and Centrais Electricas
Assuming the 90 days horizon CP ALL Public is expected to generate 2.16 times more return on investment than Centrais Electricas. However, CP ALL is 2.16 times more volatile than Centrais Electricas Brasileiras. It trades about 0.06 of its potential returns per unit of risk. Centrais Electricas Brasileiras is currently generating about -0.03 per unit of risk. If you would invest 169.00 in CP ALL Public on August 30, 2024 and sell it today you would earn a total of 37.00 from holding CP ALL Public or generate 21.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CP ALL Public vs. Centrais Electricas Brasileira
Performance |
| Timeline |
| CP ALL Public |
| Centrais Electricas |
CP ALL and Centrais Electricas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CP ALL and Centrais Electricas
The main advantage of trading using opposite CP ALL and Centrais Electricas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CP ALL position performs unexpectedly, Centrais Electricas 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 Electricas will offset losses from the drop in Centrais Electricas' long position.The idea behind CP ALL Public and Centrais Electricas Brasileiras pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Centrais Electricas vs. The Mosaic | Centrais Electricas vs. Luxfer Holdings PLC | Centrais Electricas vs. Pinterest | Centrais Electricas vs. Sensient Technologies |
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 CEOs Directory module to screen CEOs from public companies around the world.
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