Correlation Between Light SA and Transmissora Aliana
Can any of the company-specific risk be diversified away by investing in both Light SA and Transmissora Aliana 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 Light SA and Transmissora Aliana into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Light SA and Transmissora Aliana de, you can compare the effects of market volatilities on Light SA and Transmissora Aliana 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 Light SA with a short position of Transmissora Aliana. Check out your portfolio center. Please also check ongoing floating volatility patterns of Light SA and Transmissora Aliana.
Diversification Opportunities for Light SA and Transmissora Aliana
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Light and Transmissora is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Light SA and Transmissora Aliana de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transmissora Aliana and Light SA 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 Light SA are associated (or correlated) with Transmissora Aliana. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transmissora Aliana has no effect on the direction of Light SA i.e., Light SA and Transmissora Aliana go up and down completely randomly.
Pair Corralation between Light SA and Transmissora Aliana
Assuming the 90 days trading horizon Light SA is expected to generate 1.26 times less return on investment than Transmissora Aliana. In addition to that, Light SA is 2.41 times more volatile than Transmissora Aliana de. It trades about 0.02 of its total potential returns per unit of risk. Transmissora Aliana de is currently generating about 0.06 per unit of volatility. If you would invest 1,093 in Transmissora Aliana de on November 28, 2024 and sell it today you would earn a total of 14.00 from holding Transmissora Aliana de or generate 1.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Light SA vs. Transmissora Aliana de
Performance |
| Timeline |
| Light SA |
| Transmissora Aliana |
Light SA and Transmissora Aliana Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Light SA and Transmissora Aliana
The main advantage of trading using opposite Light SA and Transmissora Aliana positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Light SA position performs unexpectedly, Transmissora Aliana 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 Transmissora Aliana will offset losses from the drop in Transmissora Aliana's long position.| Light SA vs. CPFL Energia SA | Light SA vs. Companhia Energtica de | Light SA vs. Centrais Eltricas Brasileiras | Light SA vs. Companhia de Saneamento |
| Transmissora Aliana vs. Transmissora Aliana de | Transmissora Aliana vs. Companhia de Saneamento | Transmissora Aliana vs. Klabin SA | Transmissora Aliana vs. CTEEP Companhia |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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