Correlation Between Centrais Electricas and Equatorial Energia
Can any of the company-specific risk be diversified away by investing in both Centrais Electricas and Equatorial Energia 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 Equatorial Energia 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 Equatorial Energia SA, you can compare the effects of market volatilities on Centrais Electricas and Equatorial Energia 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 Equatorial Energia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Centrais Electricas and Equatorial Energia.
Diversification Opportunities for Centrais Electricas and Equatorial Energia
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Centrais and Equatorial is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Centrais Electricas Brasileira and Equatorial Energia SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equatorial Energia 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 Equatorial Energia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equatorial Energia has no effect on the direction of Centrais Electricas i.e., Centrais Electricas and Equatorial Energia go up and down completely randomly.
Pair Corralation between Centrais Electricas and Equatorial Energia
Considering the 90-day investment horizon Centrais Electricas Brasileiras is expected to under-perform the Equatorial Energia. But the stock apears to be less risky and, when comparing its historical volatility, Centrais Electricas Brasileiras is 1.59 times less risky than Equatorial Energia. The stock trades about -0.22 of its potential returns per unit of risk. The Equatorial Energia SA is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest 564.00 in Equatorial Energia SA on August 28, 2024 and sell it today you would lose (28.00) from holding Equatorial Energia SA or give up 4.96% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Centrais Electricas Brasileira vs. Equatorial Energia SA
Performance |
| Timeline |
| Centrais Electricas |
| Equatorial Energia |
Centrais Electricas and Equatorial Energia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Centrais Electricas and Equatorial Energia
The main advantage of trading using opposite Centrais Electricas and Equatorial Energia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Centrais Electricas position performs unexpectedly, Equatorial Energia 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 Equatorial Energia will offset losses from the drop in Equatorial Energia's 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 |
| Equatorial Energia vs. Avangrid | Equatorial Energia vs. Dominion Energy | Equatorial Energia vs. Centrais Electricas Brasileiras | Equatorial Energia vs. Enel Chile SA |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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