Correlation Between Elektro Redes and Usinas Siderrgicas
Can any of the company-specific risk be diversified away by investing in both Elektro Redes and Usinas Siderrgicas 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 Elektro Redes and Usinas Siderrgicas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Elektro Redes SA and Usinas Siderrgicas de, you can compare the effects of market volatilities on Elektro Redes and Usinas Siderrgicas 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 Elektro Redes with a short position of Usinas Siderrgicas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elektro Redes and Usinas Siderrgicas.
Diversification Opportunities for Elektro Redes and Usinas Siderrgicas
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Elektro and Usinas is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Elektro Redes SA and Usinas Siderrgicas de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Usinas Siderrgicas and Elektro Redes 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 Elektro Redes SA are associated (or correlated) with Usinas Siderrgicas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Usinas Siderrgicas has no effect on the direction of Elektro Redes i.e., Elektro Redes and Usinas Siderrgicas go up and down completely randomly.
Pair Corralation between Elektro Redes and Usinas Siderrgicas
Assuming the 90 days trading horizon Elektro Redes SA is expected to generate 1.83 times more return on investment than Usinas Siderrgicas. However, Elektro Redes is 1.83 times more volatile than Usinas Siderrgicas de. It trades about 0.07 of its potential returns per unit of risk. Usinas Siderrgicas de is currently generating about 0.03 per unit of risk. If you would invest 4,300 in Elektro Redes SA on September 12, 2024 and sell it today you would earn a total of 150.00 from holding Elektro Redes SA or generate 3.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Elektro Redes SA vs. Usinas Siderrgicas de
Performance |
| Timeline |
| Elektro Redes SA |
| Usinas Siderrgicas |
Elektro Redes and Usinas Siderrgicas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Elektro Redes and Usinas Siderrgicas
The main advantage of trading using opposite Elektro Redes and Usinas Siderrgicas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Elektro Redes position performs unexpectedly, Usinas Siderrgicas 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 Usinas Siderrgicas will offset losses from the drop in Usinas Siderrgicas' long position.| Elektro Redes vs. Empresa Metropolitana de | Elektro Redes vs. Companhiade Eletricidade do | Elektro Redes vs. Rio Paranapanema Energia | Elektro Redes vs. Energisa SA |
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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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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