Correlation Between Energisa and Pedra Dourada
Can any of the company-specific risk be diversified away by investing in both Energisa and Pedra Dourada 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 Pedra Dourada into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Energisa SA and Pedra Dourada Fundo, you can compare the effects of market volatilities on Energisa and Pedra Dourada 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 Pedra Dourada. Check out your portfolio center. Please also check ongoing floating volatility patterns of Energisa and Pedra Dourada.
Diversification Opportunities for Energisa and Pedra Dourada
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Energisa and Pedra is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Energisa SA and Pedra Dourada Fundo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pedra Dourada Fundo 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 Pedra Dourada. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pedra Dourada Fundo has no effect on the direction of Energisa i.e., Energisa and Pedra Dourada go up and down completely randomly.
Pair Corralation between Energisa and Pedra Dourada
Assuming the 90 days trading horizon Energisa SA is expected to generate 1.42 times more return on investment than Pedra Dourada. However, Energisa is 1.42 times more volatile than Pedra Dourada Fundo. It trades about 0.02 of its potential returns per unit of risk. Pedra Dourada Fundo is currently generating about 0.0 per unit of risk. If you would invest 3,811 in Energisa SA on November 1, 2024 and sell it today you would earn a total of 229.00 from holding Energisa SA or generate 6.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Energisa SA vs. Pedra Dourada Fundo
Performance |
| Timeline |
| Energisa SA |
| Pedra Dourada Fundo |
Energisa and Pedra Dourada Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Energisa and Pedra Dourada
The main advantage of trading using opposite Energisa and Pedra Dourada positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Energisa position performs unexpectedly, Pedra Dourada 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 Pedra Dourada will offset losses from the drop in Pedra Dourada's long position.| Energisa vs. Equatorial Energia SA | Energisa vs. CPFL Energia SA | Energisa vs. Eneva SA | Energisa vs. Companhia de Saneamento |
| Pedra Dourada vs. Energisa SA | Pedra Dourada vs. BTG Pactual Logstica | Pedra Dourada vs. Plano Plano Desenvolvimento | Pedra Dourada vs. Ares Management |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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