Correlation Between Engie Brasil and Technos SA
Can any of the company-specific risk be diversified away by investing in both Engie Brasil and Technos SA 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 Technos SA 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 Technos SA, you can compare the effects of market volatilities on Engie Brasil and Technos SA 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 Technos SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Engie Brasil and Technos SA.
Diversification Opportunities for Engie Brasil and Technos SA
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Engie and Technos is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Engie Brasil Energia and Technos SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Technos SA 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 Technos SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Technos SA has no effect on the direction of Engie Brasil i.e., Engie Brasil and Technos SA go up and down completely randomly.
Pair Corralation between Engie Brasil and Technos SA
Assuming the 90 days trading horizon Engie Brasil Energia is expected to under-perform the Technos SA. But the stock apears to be less risky and, when comparing its historical volatility, Engie Brasil Energia is 2.53 times less risky than Technos SA. The stock trades about -0.01 of its potential returns per unit of risk. The Technos SA is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 290.00 in Technos SA on September 2, 2024 and sell it today you would earn a total of 300.00 from holding Technos SA or generate 103.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 98.94% |
| Values | Daily Returns |
Engie Brasil Energia vs. Technos SA
Performance |
| Timeline |
| Engie Brasil Energia |
| Technos SA |
Engie Brasil and Technos SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Engie Brasil and Technos SA
The main advantage of trading using opposite Engie Brasil and Technos SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Engie Brasil position performs unexpectedly, Technos SA 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 Technos SA will offset losses from the drop in Technos SA'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 |
| Technos SA vs. Engie Brasil Energia | Technos SA vs. Fras le SA | Technos SA vs. Energisa SA | Technos SA vs. Clave Indices De |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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