Correlation Between Diagnsticos and Energisa
Can any of the company-specific risk be diversified away by investing in both Diagnsticos and Energisa 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 Diagnsticos and Energisa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Diagnsticos da Amrica and Energisa SA, you can compare the effects of market volatilities on Diagnsticos and Energisa 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 Diagnsticos with a short position of Energisa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Diagnsticos and Energisa.
Diversification Opportunities for Diagnsticos and Energisa
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Diagnsticos and Energisa is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Diagnsticos da Amrica and Energisa SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Energisa SA and Diagnsticos 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 Diagnsticos da Amrica are associated (or correlated) with Energisa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Energisa SA has no effect on the direction of Diagnsticos i.e., Diagnsticos and Energisa go up and down completely randomly.
Pair Corralation between Diagnsticos and Energisa
Assuming the 90 days trading horizon Diagnsticos da Amrica is expected to under-perform the Energisa. In addition to that, Diagnsticos is 2.92 times more volatile than Energisa SA. It trades about -0.11 of its total potential returns per unit of risk. Energisa SA is currently generating about -0.07 per unit of volatility. If you would invest 5,233 in Energisa SA on September 2, 2024 and sell it today you would lose (1,212) from holding Energisa SA or give up 23.16% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.2% |
| Values | Daily Returns |
Diagnsticos da Amrica vs. Energisa SA
Performance |
| Timeline |
| Diagnsticos da Amrica |
| Energisa SA |
Diagnsticos and Energisa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Diagnsticos and Energisa
The main advantage of trading using opposite Diagnsticos and Energisa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Diagnsticos position performs unexpectedly, Energisa 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 Energisa will offset losses from the drop in Energisa's long position.| Diagnsticos vs. Rossi Residencial SA | Diagnsticos vs. CCR SA | Diagnsticos vs. Odontoprev SA | Diagnsticos vs. CPFL Energia SA |
| Energisa vs. Equatorial Energia SA | Energisa vs. CPFL Energia SA | Energisa vs. Eneva SA | Energisa 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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