Correlation Between Centrais Eltricas and Energisa
Can any of the company-specific risk be diversified away by investing in both Centrais Eltricas and Energisa 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 Eltricas and Energisa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Centrais Eltricas Brasileiras and Energisa SA, you can compare the effects of market volatilities on Centrais Eltricas and Energisa 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 Eltricas with a short position of Energisa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Centrais Eltricas and Energisa.
Diversification Opportunities for Centrais Eltricas and Energisa
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Centrais and Energisa is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Centrais Eltricas Brasileiras and Energisa SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Energisa SA and Centrais Eltricas 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 Eltricas Brasileiras are associated (or correlated) with Energisa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Energisa SA has no effect on the direction of Centrais Eltricas i.e., Centrais Eltricas and Energisa go up and down completely randomly.
Pair Corralation between Centrais Eltricas and Energisa
Assuming the 90 days trading horizon Centrais Eltricas Brasileiras is expected to under-perform the Energisa. But the stock apears to be less risky and, when comparing its historical volatility, Centrais Eltricas Brasileiras is 1.13 times less risky than Energisa. The stock trades about -0.32 of its potential returns per unit of risk. The Energisa SA is currently generating about -0.14 of returns per unit of risk over similar time horizon. If you would invest 4,299 in Energisa SA on August 31, 2024 and sell it today you would lose (240.00) from holding Energisa SA or give up 5.58% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Centrais Eltricas Brasileiras vs. Energisa SA
Performance |
| Timeline |
| Centrais Eltricas |
| Energisa SA |
Centrais Eltricas and Energisa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Centrais Eltricas and Energisa
The main advantage of trading using opposite Centrais Eltricas and Energisa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Centrais Eltricas position performs unexpectedly, Energisa 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 Energisa will offset losses from the drop in Energisa's long position.| Centrais Eltricas vs. Transmissora Aliana de | Centrais Eltricas vs. CTEEP Companhia | Centrais Eltricas vs. Companhia Paranaense de | Centrais Eltricas vs. Companhia Energtica de |
| Energisa vs. Equatorial Energia SA | Energisa vs. CPFL Energia SA | Energisa vs. Eneva SA | Energisa vs. Companhia de Saneamento |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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