Correlation Between Eneva SA and Companhia Energtica
Can any of the company-specific risk be diversified away by investing in both Eneva SA and Companhia Energtica 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 Eneva SA and Companhia Energtica into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eneva SA and Companhia Energtica do, you can compare the effects of market volatilities on Eneva SA and Companhia Energtica 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 Eneva SA with a short position of Companhia Energtica. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eneva SA and Companhia Energtica.
Diversification Opportunities for Eneva SA and Companhia Energtica
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Eneva and Companhia is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Eneva SA and Companhia Energtica do in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Companhia Energtica and Eneva SA 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 Eneva SA are associated (or correlated) with Companhia Energtica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Companhia Energtica has no effect on the direction of Eneva SA i.e., Eneva SA and Companhia Energtica go up and down completely randomly.
Pair Corralation between Eneva SA and Companhia Energtica
Assuming the 90 days trading horizon Eneva SA is expected to generate 0.92 times more return on investment than Companhia Energtica. However, Eneva SA is 1.09 times less risky than Companhia Energtica. It trades about 0.02 of its potential returns per unit of risk. Companhia Energtica do is currently generating about -0.05 per unit of risk. If you would invest 1,077 in Eneva SA on November 27, 2024 and sell it today you would earn a total of 115.00 from holding Eneva SA or generate 10.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eneva SA vs. Companhia Energtica do
Performance |
| Timeline |
| Eneva SA |
| Companhia Energtica |
Eneva SA and Companhia Energtica Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eneva SA and Companhia Energtica
The main advantage of trading using opposite Eneva SA and Companhia Energtica positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eneva SA position performs unexpectedly, Companhia Energtica 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 Energtica will offset losses from the drop in Companhia Energtica's long position.| Eneva SA vs. Banco BTG Pactual | Eneva SA vs. Cosan SA | Eneva SA vs. Banco Pan SA | Eneva SA vs. Equatorial Energia SA |
| Companhia Energtica vs. CPFL Energia SA | Companhia Energtica vs. Light SA | Companhia Energtica vs. Eneva SA | Companhia Energtica vs. Companhia de Gs |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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