Correlation Between Companhia Paranaense and Engie SA
Can any of the company-specific risk be diversified away by investing in both Companhia Paranaense and Engie 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 Companhia Paranaense and Engie SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Companhia Paranaense de and Engie SA ADR, you can compare the effects of market volatilities on Companhia Paranaense and Engie 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 Companhia Paranaense with a short position of Engie SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Companhia Paranaense and Engie SA.
Diversification Opportunities for Companhia Paranaense and Engie SA
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Companhia and Engie is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Companhia Paranaense de and Engie SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Engie SA ADR and Companhia Paranaense 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 Companhia Paranaense de are associated (or correlated) with Engie SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Engie SA ADR has no effect on the direction of Companhia Paranaense i.e., Companhia Paranaense and Engie SA go up and down completely randomly.
Pair Corralation between Companhia Paranaense and Engie SA
Considering the 90-day investment horizon Companhia Paranaense de is expected to generate 1.73 times more return on investment than Engie SA. However, Companhia Paranaense is 1.73 times more volatile than Engie SA ADR. It trades about 0.48 of its potential returns per unit of risk. Engie SA ADR is currently generating about -0.08 per unit of risk. If you would invest 604.00 in Companhia Paranaense de on November 18, 2024 and sell it today you would earn a total of 122.00 from holding Companhia Paranaense de or generate 20.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Companhia Paranaense de vs. Engie SA ADR
Performance |
| Timeline |
| Companhia Paranaense |
| Engie SA ADR |
Companhia Paranaense and Engie SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Companhia Paranaense and Engie SA
The main advantage of trading using opposite Companhia Paranaense and Engie SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Companhia Paranaense position performs unexpectedly, Engie 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 Engie SA will offset losses from the drop in Engie SA's long position.| Companhia Paranaense vs. Montauk Renewables | Companhia Paranaense vs. Energy of Minas | Companhia Paranaense vs. NorthWestern | Companhia Paranaense vs. Otter Tail |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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