Correlation Between Luggo Fundo and Energisa
Can any of the company-specific risk be diversified away by investing in both Luggo Fundo and Energisa 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 Luggo Fundo and Energisa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Luggo Fundo De and Energisa SA, you can compare the effects of market volatilities on Luggo Fundo and Energisa 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 Luggo Fundo with a short position of Energisa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Luggo Fundo and Energisa.
Diversification Opportunities for Luggo Fundo and Energisa
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Luggo and Energisa is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Luggo Fundo De and Energisa SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Energisa SA and Luggo Fundo 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 Luggo Fundo De are associated (or correlated) with Energisa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Energisa SA has no effect on the direction of Luggo Fundo i.e., Luggo Fundo and Energisa go up and down completely randomly.
Pair Corralation between Luggo Fundo and Energisa
Assuming the 90 days trading horizon Luggo Fundo De is expected to generate 0.7 times more return on investment than Energisa. However, Luggo Fundo De is 1.43 times less risky than Energisa. It trades about -0.16 of its potential returns per unit of risk. Energisa SA is currently generating about -0.11 per unit of risk. If you would invest 7,250 in Luggo Fundo De on August 30, 2024 and sell it today you would lose (471.00) from holding Luggo Fundo De or give up 6.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Luggo Fundo De vs. Energisa SA
Performance |
| Timeline |
| Luggo Fundo De |
| Energisa SA |
Luggo Fundo and Energisa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Luggo Fundo and Energisa
The main advantage of trading using opposite Luggo Fundo and Energisa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Luggo Fundo position performs unexpectedly, Energisa 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 Energisa will offset losses from the drop in Energisa's long position.| Luggo Fundo vs. Energisa SA | Luggo Fundo vs. BTG Pactual Logstica | Luggo Fundo vs. Plano Plano Desenvolvimento | Luggo Fundo vs. The Procter Gamble |
| Energisa vs. Equatorial Energia SA | Energisa vs. CPFL Energia SA | Energisa vs. Eneva SA | Energisa vs. Companhia de Saneamento |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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