Correlation Between Energisa and Hidrovias
Can any of the company-specific risk be diversified away by investing in both Energisa and Hidrovias 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 Hidrovias into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Energisa SA and Hidrovias do Brasil, you can compare the effects of market volatilities on Energisa and Hidrovias 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 Hidrovias. Check out your portfolio center. Please also check ongoing floating volatility patterns of Energisa and Hidrovias.
Diversification Opportunities for Energisa and Hidrovias
Very poor diversification
The 3 months correlation between Energisa and Hidrovias is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Energisa SA and Hidrovias do Brasil in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hidrovias do Brasil 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 Hidrovias. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hidrovias do Brasil has no effect on the direction of Energisa i.e., Energisa and Hidrovias go up and down completely randomly.
Pair Corralation between Energisa and Hidrovias
Assuming the 90 days trading horizon Energisa SA is expected to generate 0.56 times more return on investment than Hidrovias. However, Energisa SA is 1.8 times less risky than Hidrovias. It trades about -0.07 of its potential returns per unit of risk. Hidrovias do Brasil is currently generating about -0.07 per unit of risk. If you would invest 4,122 in Energisa SA on September 12, 2024 and sell it today you would lose (127.00) from holding Energisa SA or give up 3.08% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Energisa SA vs. Hidrovias do Brasil
Performance |
| Timeline |
| Energisa SA |
| Hidrovias do Brasil |
Energisa and Hidrovias Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Energisa and Hidrovias
The main advantage of trading using opposite Energisa and Hidrovias positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Energisa position performs unexpectedly, Hidrovias 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 Hidrovias will offset losses from the drop in Hidrovias' long position.| Energisa vs. Equatorial Energia SA | Energisa vs. CPFL Energia SA | Energisa vs. Eneva SA | Energisa vs. Companhia de Saneamento |
| Hidrovias vs. Aeris Indstria e | Hidrovias vs. Sequoia Logstica e | Hidrovias vs. Grupo Mateus SA | Hidrovias vs. Santos Brasil Participaes |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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