Correlation Between Centrais Electricas and Centrais Elétricas
Can any of the company-specific risk be diversified away by investing in both Centrais Electricas and Centrais Elétricas 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 Centrais Electricas and Centrais Elétricas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Centrais Electricas Brasileiras and Centrais Eltricas Brasileiras, you can compare the effects of market volatilities on Centrais Electricas and Centrais Elétricas 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 Centrais Electricas with a short position of Centrais Elétricas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Centrais Electricas and Centrais Elétricas.
Diversification Opportunities for Centrais Electricas and Centrais Elétricas
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Centrais and Centrais is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Centrais Electricas Brasileira and Centrais Eltricas Brasileiras in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centrais Elétricas and Centrais Electricas 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 Centrais Electricas Brasileiras are associated (or correlated) with Centrais Elétricas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Centrais Elétricas has no effect on the direction of Centrais Electricas i.e., Centrais Electricas and Centrais Elétricas go up and down completely randomly.
Pair Corralation between Centrais Electricas and Centrais Elétricas
Considering the 90-day investment horizon Centrais Electricas Brasileiras is expected to under-perform the Centrais Elétricas. But the stock apears to be less risky and, when comparing its historical volatility, Centrais Electricas Brasileiras is 1.3 times less risky than Centrais Elétricas. The stock trades about -0.01 of its potential returns per unit of risk. The Centrais Eltricas Brasileiras is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 696.00 in Centrais Eltricas Brasileiras on October 25, 2024 and sell it today you would lose (35.00) from holding Centrais Eltricas Brasileiras or give up 5.03% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Centrais Electricas Brasileira vs. Centrais Eltricas Brasileiras
Performance |
| Timeline |
| Centrais Electricas |
| Centrais Elétricas |
Centrais Electricas and Centrais Elétricas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Centrais Electricas and Centrais Elétricas
The main advantage of trading using opposite Centrais Electricas and Centrais Elétricas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Centrais Electricas position performs unexpectedly, Centrais Elétricas 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 Elétricas will offset losses from the drop in Centrais Elétricas' long position.| Centrais Electricas vs. Genie Energy | Centrais Electricas vs. Central Puerto SA | Centrais Electricas vs. Korea Electric Power | Centrais Electricas vs. Empresa Distribuidora y |
| Centrais Elétricas vs. Nextera Energy | Centrais Elétricas vs. Consumers Energy | Centrais Elétricas vs. Duke Energy | Centrais Elétricas vs. Red Electrica Corporacion |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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