Correlation Between Companhia Habitasul and CPFL Energia
Can any of the company-specific risk be diversified away by investing in both Companhia Habitasul and CPFL Energia 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 Companhia Habitasul and CPFL Energia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Companhia Habitasul de and CPFL Energia SA, you can compare the effects of market volatilities on Companhia Habitasul and CPFL Energia 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 Companhia Habitasul with a short position of CPFL Energia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Companhia Habitasul and CPFL Energia.
Diversification Opportunities for Companhia Habitasul and CPFL Energia
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Companhia and CPFL is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Companhia Habitasul de and CPFL Energia SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CPFL Energia SA and Companhia Habitasul 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 Companhia Habitasul de are associated (or correlated) with CPFL Energia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CPFL Energia SA has no effect on the direction of Companhia Habitasul i.e., Companhia Habitasul and CPFL Energia go up and down completely randomly.
Pair Corralation between Companhia Habitasul and CPFL Energia
Assuming the 90 days trading horizon Companhia Habitasul de is expected to under-perform the CPFL Energia. In addition to that, Companhia Habitasul is 3.41 times more volatile than CPFL Energia SA. It trades about -0.06 of its total potential returns per unit of risk. CPFL Energia SA is currently generating about 0.01 per unit of volatility. If you would invest 3,293 in CPFL Energia SA on August 27, 2024 and sell it today you would earn a total of 5.00 from holding CPFL Energia SA or generate 0.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Companhia Habitasul de vs. CPFL Energia SA
Performance |
| Timeline |
| Companhia Habitasul |
| CPFL Energia SA |
Companhia Habitasul and CPFL Energia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Companhia Habitasul and CPFL Energia
The main advantage of trading using opposite Companhia Habitasul and CPFL Energia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Companhia Habitasul position performs unexpectedly, CPFL Energia 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 CPFL Energia will offset losses from the drop in CPFL Energia's long position.| Companhia Habitasul vs. BTG Pactual Logstica | Companhia Habitasul vs. Plano Plano Desenvolvimento | Companhia Habitasul vs. Cable One | Companhia Habitasul vs. ATMA Participaes SA |
| CPFL Energia vs. BB Seguridade Participacoes | CPFL Energia vs. Engie Brasil Energia | CPFL Energia vs. CTEEP Companhia | CPFL Energia vs. Itasa Investimentos |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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