Correlation Between Centrais Eltricas and Companhia Siderrgica
Can any of the company-specific risk be diversified away by investing in both Centrais Eltricas and Companhia Siderrgica 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 Companhia Siderrgica 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 Companhia Siderrgica Nacional, you can compare the effects of market volatilities on Centrais Eltricas and Companhia Siderrgica 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 Companhia Siderrgica. Check out your portfolio center. Please also check ongoing floating volatility patterns of Centrais Eltricas and Companhia Siderrgica.
Diversification Opportunities for Centrais Eltricas and Companhia Siderrgica
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Centrais and Companhia is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Centrais Eltricas Brasileiras and Companhia Siderrgica Nacional in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Companhia Siderrgica 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 Companhia Siderrgica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Companhia Siderrgica has no effect on the direction of Centrais Eltricas i.e., Centrais Eltricas and Companhia Siderrgica go up and down completely randomly.
Pair Corralation between Centrais Eltricas and Companhia Siderrgica
Assuming the 90 days trading horizon Centrais Eltricas Brasileiras is expected to generate 0.62 times more return on investment than Companhia Siderrgica. However, Centrais Eltricas Brasileiras is 1.62 times less risky than Companhia Siderrgica. It trades about 0.0 of its potential returns per unit of risk. Companhia Siderrgica Nacional is currently generating about -0.04 per unit of risk. If you would invest 4,098 in Centrais Eltricas Brasileiras on August 26, 2024 and sell it today you would lose (117.00) from holding Centrais Eltricas Brasileiras or give up 2.86% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.2% |
| Values | Daily Returns |
Centrais Eltricas Brasileiras vs. Companhia Siderrgica Nacional
Performance |
| Timeline |
| Centrais Eltricas |
| Companhia Siderrgica |
Centrais Eltricas and Companhia Siderrgica Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Centrais Eltricas and Companhia Siderrgica
The main advantage of trading using opposite Centrais Eltricas and Companhia Siderrgica positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Centrais Eltricas position performs unexpectedly, Companhia Siderrgica 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 Companhia Siderrgica will offset losses from the drop in Companhia Siderrgica's long position.| Centrais Eltricas vs. CTEEP Companhia | Centrais Eltricas vs. BB Seguridade Participacoes | Centrais Eltricas vs. Transmissora Aliana de | Centrais Eltricas vs. Itasa Investimentos |
| Companhia Siderrgica vs. Palantir Technologies | Companhia Siderrgica vs. Warner Music Group | Companhia Siderrgica vs. Verizon Communications | Companhia Siderrgica vs. Dell Technologies |
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 Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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