Correlation Between Energisa and Tupy SA
Can any of the company-specific risk be diversified away by investing in both Energisa and Tupy SA 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 Tupy SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Energisa SA and Tupy SA, you can compare the effects of market volatilities on Energisa and Tupy SA 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 Tupy SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Energisa and Tupy SA.
Diversification Opportunities for Energisa and Tupy SA
Almost no diversification
The 3 months correlation between Energisa and Tupy is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Energisa SA and Tupy SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tupy SA 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 Tupy SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tupy SA has no effect on the direction of Energisa i.e., Energisa and Tupy SA go up and down completely randomly.
Pair Corralation between Energisa and Tupy SA
Assuming the 90 days trading horizon Energisa SA is expected to under-perform the Tupy SA. But the stock apears to be less risky and, when comparing its historical volatility, Energisa SA is 1.14 times less risky than Tupy SA. The stock trades about -0.08 of its potential returns per unit of risk. The Tupy SA is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest 2,279 in Tupy SA on September 3, 2024 and sell it today you would lose (265.00) from holding Tupy SA or give up 11.63% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Energisa SA vs. Tupy SA
Performance |
| Timeline |
| Energisa SA |
| Tupy SA |
Energisa and Tupy SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Energisa and Tupy SA
The main advantage of trading using opposite Energisa and Tupy SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Energisa position performs unexpectedly, Tupy SA 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 Tupy SA will offset losses from the drop in Tupy SA's long position.| Energisa vs. Equatorial Energia SA | Energisa vs. CPFL Energia SA | Energisa vs. Eneva SA | Energisa vs. Companhia de Saneamento |
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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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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