Correlation Between Energisa and Companhiade Eletricidade
Can any of the company-specific risk be diversified away by investing in both Energisa and Companhiade Eletricidade 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 Companhiade Eletricidade into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Energisa SA and Companhiade Eletricidade do, you can compare the effects of market volatilities on Energisa and Companhiade Eletricidade 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 Companhiade Eletricidade. Check out your portfolio center. Please also check ongoing floating volatility patterns of Energisa and Companhiade Eletricidade.
Diversification Opportunities for Energisa and Companhiade Eletricidade
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Energisa and Companhiade is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Energisa SA and Companhiade Eletricidade do in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Companhiade Eletricidade 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 Companhiade Eletricidade. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Companhiade Eletricidade has no effect on the direction of Energisa i.e., Energisa and Companhiade Eletricidade go up and down completely randomly.
Pair Corralation between Energisa and Companhiade Eletricidade
Assuming the 90 days trading horizon Energisa SA is expected to generate 3.36 times more return on investment than Companhiade Eletricidade. However, Energisa is 3.36 times more volatile than Companhiade Eletricidade do. It trades about 0.11 of its potential returns per unit of risk. Companhiade Eletricidade do is currently generating about -0.03 per unit of risk. If you would invest 1,100 in Energisa SA on November 27, 2024 and sell it today you would earn a total of 81.00 from holding Energisa SA or generate 7.36% 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. Companhiade Eletricidade do
Performance |
| Timeline |
| Energisa SA |
| Companhiade Eletricidade |
Energisa and Companhiade Eletricidade Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Energisa and Companhiade Eletricidade
The main advantage of trading using opposite Energisa and Companhiade Eletricidade positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Energisa position performs unexpectedly, Companhiade Eletricidade 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 Companhiade Eletricidade will offset losses from the drop in Companhiade Eletricidade's long position.| Energisa vs. Energisa SA | Energisa vs. Equatorial Energia SA | Energisa vs. Energisa SA | Energisa vs. Transmissora Aliana de |
| Companhiade Eletricidade vs. Companhia Energtica do | Companhiade Eletricidade vs. Empresa Metropolitana de | Companhiade Eletricidade vs. Companhia Energtica de |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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