Correlation Between Energisa and CTEEP Companhia
Can any of the company-specific risk be diversified away by investing in both Energisa and CTEEP Companhia 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 CTEEP Companhia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Energisa SA and CTEEP Companhia, you can compare the effects of market volatilities on Energisa and CTEEP Companhia 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 CTEEP Companhia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Energisa and CTEEP Companhia.
Diversification Opportunities for Energisa and CTEEP Companhia
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Energisa and CTEEP is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Energisa SA and CTEEP Companhia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CTEEP Companhia 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 CTEEP Companhia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CTEEP Companhia has no effect on the direction of Energisa i.e., Energisa and CTEEP Companhia go up and down completely randomly.
Pair Corralation between Energisa and CTEEP Companhia
Assuming the 90 days trading horizon Energisa SA is expected to under-perform the CTEEP Companhia. In addition to that, Energisa is 1.75 times more volatile than CTEEP Companhia. It trades about -0.09 of its total potential returns per unit of risk. CTEEP Companhia is currently generating about 0.07 per unit of volatility. If you would invest 3,089 in CTEEP Companhia on August 24, 2024 and sell it today you would earn a total of 37.00 from holding CTEEP Companhia or generate 1.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Energisa SA vs. CTEEP Companhia
Performance |
| Timeline |
| Energisa SA |
| CTEEP Companhia |
Energisa and CTEEP Companhia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Energisa and CTEEP Companhia
The main advantage of trading using opposite Energisa and CTEEP Companhia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Energisa position performs unexpectedly, CTEEP Companhia 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 CTEEP Companhia will offset losses from the drop in CTEEP Companhia's long position.| Energisa vs. CTEEP Companhia | Energisa vs. CPFL Energia SA | Energisa vs. BTG Pactual Logstica | Energisa vs. Plano Plano Desenvolvimento |
| CTEEP Companhia vs. CTEEP Companhia | CTEEP Companhia vs. Companhia Paranaense de | CTEEP Companhia vs. Companhia Energtica de | CTEEP Companhia 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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