Correlation Between Engie Brasil and Profarma Distribuidora
Can any of the company-specific risk be diversified away by investing in both Engie Brasil and Profarma 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 Engie Brasil and Profarma Distribuidora into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Engie Brasil Energia and Profarma Distribuidora de, you can compare the effects of market volatilities on Engie Brasil and Profarma 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 Engie Brasil with a short position of Profarma Distribuidora. Check out your portfolio center. Please also check ongoing floating volatility patterns of Engie Brasil and Profarma Distribuidora.
Diversification Opportunities for Engie Brasil and Profarma Distribuidora
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Engie and Profarma is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Engie Brasil Energia and Profarma Distribuidora de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Profarma Distribuidora and Engie Brasil 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 Engie Brasil Energia are associated (or correlated) with Profarma Distribuidora. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Profarma Distribuidora has no effect on the direction of Engie Brasil i.e., Engie Brasil and Profarma Distribuidora go up and down completely randomly.
Pair Corralation between Engie Brasil and Profarma Distribuidora
Assuming the 90 days trading horizon Engie Brasil is expected to generate 7.57 times less return on investment than Profarma Distribuidora. But when comparing it to its historical volatility, Engie Brasil Energia is 2.53 times less risky than Profarma Distribuidora. It trades about 0.02 of its potential returns per unit of risk. Profarma Distribuidora de is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 295.00 in Profarma Distribuidora de on August 30, 2024 and sell it today you would earn a total of 412.00 from holding Profarma Distribuidora de or generate 139.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 98.8% |
| Values | Daily Returns |
Engie Brasil Energia vs. Profarma Distribuidora de
Performance |
| Timeline |
| Engie Brasil Energia |
| Profarma Distribuidora |
Engie Brasil and Profarma Distribuidora Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Engie Brasil and Profarma Distribuidora
The main advantage of trading using opposite Engie Brasil and Profarma Distribuidora positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Engie Brasil position performs unexpectedly, Profarma 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 Profarma Distribuidora will offset losses from the drop in Profarma Distribuidora's long position.| Engie Brasil vs. WEG SA | Engie Brasil vs. Transmissora Aliana de | Engie Brasil vs. Fleury SA | Engie Brasil vs. BB Seguridade Participacoes |
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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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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