Correlation Between Edesa Holding and Distribuidora
Can any of the company-specific risk be diversified away by investing in both Edesa Holding and Distribuidora 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 Edesa Holding and Distribuidora into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Edesa Holding SA and Distribuidora de Gas, you can compare the effects of market volatilities on Edesa Holding and Distribuidora 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 Edesa Holding with a short position of Distribuidora. Check out your portfolio center. Please also check ongoing floating volatility patterns of Edesa Holding and Distribuidora.
Diversification Opportunities for Edesa Holding and Distribuidora
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Edesa and Distribuidora is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Edesa Holding SA and Distribuidora de Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Distribuidora de Gas and Edesa Holding 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 Edesa Holding SA are associated (or correlated) with Distribuidora. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Distribuidora de Gas has no effect on the direction of Edesa Holding i.e., Edesa Holding and Distribuidora go up and down completely randomly.
Pair Corralation between Edesa Holding and Distribuidora
Assuming the 90 days trading horizon Edesa Holding is expected to generate 2.66 times less return on investment than Distribuidora. But when comparing it to its historical volatility, Edesa Holding SA is 1.99 times less risky than Distribuidora. It trades about 0.12 of its potential returns per unit of risk. Distribuidora de Gas is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 13,075 in Distribuidora de Gas on August 26, 2024 and sell it today you would earn a total of 174,925 from holding Distribuidora de Gas or generate 1337.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 99.59% |
| Values | Daily Returns |
Edesa Holding SA vs. Distribuidora de Gas
Performance |
| Timeline |
| Edesa Holding SA |
| Distribuidora de Gas |
Edesa Holding and Distribuidora Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Edesa Holding and Distribuidora
The main advantage of trading using opposite Edesa Holding and Distribuidora positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Edesa Holding position performs unexpectedly, Distribuidora 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 Distribuidora will offset losses from the drop in Distribuidora's long position.| Edesa Holding vs. American Express Co | Edesa Holding vs. United States Steel | Edesa Holding vs. Capex SA | Edesa Holding vs. Pfizer Inc |
| Distribuidora vs. Edesa Holding SA | Distribuidora vs. American Express Co | Distribuidora vs. United States Steel | Distribuidora vs. Capex 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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