Correlation Between Centrais Eltricas and Baumer SA
Can any of the company-specific risk be diversified away by investing in both Centrais Eltricas and Baumer 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 Centrais Eltricas and Baumer SA 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 Baumer SA, you can compare the effects of market volatilities on Centrais Eltricas and Baumer 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 Centrais Eltricas with a short position of Baumer SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Centrais Eltricas and Baumer SA.
Diversification Opportunities for Centrais Eltricas and Baumer SA
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Centrais and Baumer is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Centrais Eltricas Brasileiras and Baumer SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baumer 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 Baumer SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baumer SA has no effect on the direction of Centrais Eltricas i.e., Centrais Eltricas and Baumer SA go up and down completely randomly.
Pair Corralation between Centrais Eltricas and Baumer SA
Assuming the 90 days trading horizon Centrais Eltricas Brasileiras is expected to under-perform the Baumer SA. But the preferred stock apears to be less risky and, when comparing its historical volatility, Centrais Eltricas Brasileiras is 1.14 times less risky than Baumer SA. The preferred stock trades about -0.17 of its potential returns per unit of risk. The Baumer SA is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 1,030 in Baumer SA on September 2, 2024 and sell it today you would earn a total of 50.00 from holding Baumer SA or generate 4.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Centrais Eltricas Brasileiras vs. Baumer SA
Performance |
| Timeline |
| Centrais Eltricas |
| Baumer SA |
Centrais Eltricas and Baumer SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Centrais Eltricas and Baumer SA
The main advantage of trading using opposite Centrais Eltricas and Baumer SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Centrais Eltricas position performs unexpectedly, Baumer 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 Baumer SA will offset losses from the drop in Baumer SA's long position.| Centrais Eltricas vs. CTEEP Companhia | Centrais Eltricas vs. Companhia Energtica de | Centrais Eltricas vs. CPFL Energia SA |
| Baumer SA vs. Baumer SA | Baumer SA vs. Biomm SA | Baumer SA vs. Bardella SA Indstrias | Baumer SA vs. Banco Alfa 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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