Correlation Between Energisa and Companhia Siderrgica
Can any of the company-specific risk be diversified away by investing in both Energisa 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 Energisa and Companhia Siderrgica 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 Siderrgica Nacional, you can compare the effects of market volatilities on Energisa 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 Energisa with a short position of Companhia Siderrgica. Check out your portfolio center. Please also check ongoing floating volatility patterns of Energisa and Companhia Siderrgica.
Diversification Opportunities for Energisa and Companhia Siderrgica
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Energisa and Companhia is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Energisa SA and Companhia Siderrgica Nacional in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Companhia Siderrgica 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 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 Energisa i.e., Energisa and Companhia Siderrgica go up and down completely randomly.
Pair Corralation between Energisa and Companhia Siderrgica
Assuming the 90 days trading horizon Energisa is expected to generate 3.34 times less return on investment than Companhia Siderrgica. But when comparing it to its historical volatility, Energisa SA is 1.63 times less risky than Companhia Siderrgica. It trades about 0.01 of its potential returns per unit of risk. Companhia Siderrgica Nacional is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 1,083 in Companhia Siderrgica Nacional on September 2, 2024 and sell it today you would earn a total of 33.00 from holding Companhia Siderrgica Nacional or generate 3.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.2% |
| Values | Daily Returns |
Energisa SA vs. Companhia Siderrgica Nacional
Performance |
| Timeline |
| Energisa SA |
| Companhia Siderrgica |
Energisa and Companhia Siderrgica Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Energisa and Companhia Siderrgica
The main advantage of trading using opposite Energisa and Companhia Siderrgica positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Energisa 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.| Energisa vs. Equatorial Energia SA | Energisa vs. CPFL Energia SA | Energisa vs. Eneva SA | Energisa vs. Companhia de Saneamento |
| Companhia Siderrgica vs. BrasilAgro Companhia | Companhia Siderrgica vs. Indstrias Romi SA | Companhia Siderrgica vs. JHSF Participaes SA | Companhia Siderrgica vs. Energisa SA |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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