Correlation Between Energisa and Centrais Eltricas
Can any of the company-specific risk be diversified away by investing in both Energisa and Centrais Eltricas 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 Centrais Eltricas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Energisa SA and Centrais Eltricas de, you can compare the effects of market volatilities on Energisa and Centrais Eltricas 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 Centrais Eltricas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Energisa and Centrais Eltricas.
Diversification Opportunities for Energisa and Centrais Eltricas
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Energisa and Centrais is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Energisa SA and Centrais Eltricas de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centrais Eltricas 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 Centrais Eltricas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Centrais Eltricas has no effect on the direction of Energisa i.e., Energisa and Centrais Eltricas go up and down completely randomly.
Pair Corralation between Energisa and Centrais Eltricas
Assuming the 90 days trading horizon Energisa SA is expected to under-perform the Centrais Eltricas. In addition to that, Energisa is 1.63 times more volatile than Centrais Eltricas de. It trades about -0.07 of its total potential returns per unit of risk. Centrais Eltricas de is currently generating about 0.08 per unit of volatility. If you would invest 5,898 in Centrais Eltricas de on September 14, 2024 and sell it today you would earn a total of 1,602 from holding Centrais Eltricas de or generate 27.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Energisa SA vs. Centrais Eltricas de
Performance |
| Timeline |
| Energisa SA |
| Centrais Eltricas |
Energisa and Centrais Eltricas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Energisa and Centrais Eltricas
The main advantage of trading using opposite Energisa and Centrais Eltricas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Energisa position performs unexpectedly, Centrais Eltricas 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 Centrais Eltricas will offset losses from the drop in Centrais Eltricas' long position.| Energisa vs. Energisa SA | Energisa vs. Equatorial Energia SA | Energisa vs. Energisa SA | Energisa vs. Transmissora Aliana de |
| Centrais Eltricas vs. CTEEP Companhia | Centrais Eltricas vs. Empresa Metropolitana de | Centrais Eltricas vs. Energisa SA | Centrais Eltricas 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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