Correlation Between Energisa and Companhia Energtica
Can any of the company-specific risk be diversified away by investing in both Energisa 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 Energisa and Companhia Energtica into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Energisa SA and Companhia Energtica de, you can compare the effects of market volatilities on Energisa 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 Energisa with a short position of Companhia Energtica. Check out your portfolio center. Please also check ongoing floating volatility patterns of Energisa and Companhia Energtica.
Diversification Opportunities for Energisa and Companhia Energtica
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Energisa and Companhia is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Energisa SA and Companhia Energtica de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Companhia Energtica and Energisa 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 Energisa 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 Energisa i.e., Energisa and Companhia Energtica go up and down completely randomly.
Pair Corralation between Energisa and Companhia Energtica
Assuming the 90 days trading horizon Energisa is expected to generate 5.01 times less return on investment than Companhia Energtica. But when comparing it to its historical volatility, Energisa SA is 1.32 times less risky than Companhia Energtica. It trades about 0.01 of its potential returns per unit of risk. Companhia Energtica de is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 1,042 in Companhia Energtica de on August 27, 2024 and sell it today you would earn a total of 414.00 from holding Companhia Energtica de or generate 39.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.56% |
| Values | Daily Returns |
Energisa SA vs. Companhia Energtica de
Performance |
| Timeline |
| Energisa SA |
| Companhia Energtica |
Energisa and Companhia Energtica Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Energisa and Companhia Energtica
The main advantage of trading using opposite Energisa and Companhia Energtica positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Energisa 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.| Energisa vs. Centrais Eltricas Brasileiras | Energisa vs. Companhia Energtica de | Energisa vs. Companhia de Saneamento | Energisa vs. Companhia Siderrgica Nacional |
| Companhia Energtica vs. Companhia Energtica de | Companhia Energtica vs. Centrais Eltricas Brasileiras | Companhia Energtica vs. Centrais Eltricas Brasileiras | Companhia Energtica vs. Companhia de Saneamento |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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