Correlation Between Companhia Paranaense and Transportadora
Can any of the company-specific risk be diversified away by investing in both Companhia Paranaense and Transportadora 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 Transportadora 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 Transportadora de Gas, you can compare the effects of market volatilities on Companhia Paranaense and Transportadora 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 Transportadora. Check out your portfolio center. Please also check ongoing floating volatility patterns of Companhia Paranaense and Transportadora.
Diversification Opportunities for Companhia Paranaense and Transportadora
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Companhia and Transportadora is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Companhia Paranaense de and Transportadora de Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transportadora de Gas 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 Transportadora. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transportadora de Gas has no effect on the direction of Companhia Paranaense i.e., Companhia Paranaense and Transportadora go up and down completely randomly.
Pair Corralation between Companhia Paranaense and Transportadora
Given the investment horizon of 90 days Companhia Paranaense de is expected to under-perform the Transportadora. But the stock apears to be less risky and, when comparing its historical volatility, Companhia Paranaense de is 1.53 times less risky than Transportadora. The stock trades about -0.02 of its potential returns per unit of risk. The Transportadora de Gas is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 901.00 in Transportadora de Gas on December 12, 2024 and sell it today you would earn a total of 1,692 from holding Transportadora de Gas or generate 187.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 60.73% |
| Values | Daily Returns |
Companhia Paranaense de vs. Transportadora de Gas
Performance |
| Timeline |
| Companhia Paranaense |
| Transportadora de Gas |
Companhia Paranaense and Transportadora Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Companhia Paranaense and Transportadora
The main advantage of trading using opposite Companhia Paranaense and Transportadora positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Companhia Paranaense position performs unexpectedly, Transportadora 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 Transportadora will offset losses from the drop in Transportadora's long position.| Companhia Paranaense vs. Sun Country Airlines | ||
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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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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