Correlation Between Profarma Distribuidora and Engie Brasil
Can any of the company-specific risk be diversified away by investing in both Profarma Distribuidora and Engie Brasil 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 Profarma Distribuidora and Engie Brasil into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Profarma Distribuidora de and Engie Brasil Energia, you can compare the effects of market volatilities on Profarma Distribuidora and Engie Brasil 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 Profarma Distribuidora with a short position of Engie Brasil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Profarma Distribuidora and Engie Brasil.
Diversification Opportunities for Profarma Distribuidora and Engie Brasil
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Profarma and Engie is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Profarma Distribuidora de and Engie Brasil Energia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Engie Brasil Energia and Profarma Distribuidora 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 Profarma Distribuidora de are associated (or correlated) with Engie Brasil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Engie Brasil Energia has no effect on the direction of Profarma Distribuidora i.e., Profarma Distribuidora and Engie Brasil go up and down completely randomly.
Pair Corralation between Profarma Distribuidora and Engie Brasil
Assuming the 90 days trading horizon Profarma Distribuidora de is expected to generate 2.33 times more return on investment than Engie Brasil. However, Profarma Distribuidora is 2.33 times more volatile than Engie Brasil Energia. It trades about 0.06 of its potential returns per unit of risk. Engie Brasil Energia is currently generating about -0.02 per unit of risk. If you would invest 506.00 in Profarma Distribuidora de on August 26, 2024 and sell it today you would earn a total of 178.00 from holding Profarma Distribuidora de or generate 35.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.2% |
| Values | Daily Returns |
Profarma Distribuidora de vs. Engie Brasil Energia
Performance |
| Timeline |
| Profarma Distribuidora |
| Engie Brasil Energia |
Profarma Distribuidora and Engie Brasil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Profarma Distribuidora and Engie Brasil
The main advantage of trading using opposite Profarma Distribuidora and Engie Brasil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Profarma Distribuidora position performs unexpectedly, Engie Brasil 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 Engie Brasil will offset losses from the drop in Engie Brasil's long position.| Profarma Distribuidora vs. Engie Brasil Energia | Profarma Distribuidora vs. WEG SA | Profarma Distribuidora vs. Ambev SA | Profarma Distribuidora vs. M Dias Branco |
| Engie Brasil vs. WEG SA | Engie Brasil vs. Transmissora Aliana de | Engie Brasil vs. Fleury SA | Engie Brasil vs. BB Seguridade Participacoes |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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