Correlation Between Raia Drogasil and Equatorial Energia
Can any of the company-specific risk be diversified away by investing in both Raia Drogasil and Equatorial 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 Raia Drogasil and Equatorial Energia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Raia Drogasil SA and Equatorial Energia SA, you can compare the effects of market volatilities on Raia Drogasil and Equatorial 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 Raia Drogasil with a short position of Equatorial Energia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Raia Drogasil and Equatorial Energia.
Diversification Opportunities for Raia Drogasil and Equatorial Energia
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Raia and Equatorial is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Raia Drogasil SA and Equatorial Energia SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equatorial Energia and Raia Drogasil 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 Raia Drogasil SA are associated (or correlated) with Equatorial Energia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equatorial Energia has no effect on the direction of Raia Drogasil i.e., Raia Drogasil and Equatorial Energia go up and down completely randomly.
Pair Corralation between Raia Drogasil and Equatorial Energia
Assuming the 90 days trading horizon Raia Drogasil is expected to generate 1.72 times less return on investment than Equatorial Energia. But when comparing it to its historical volatility, Raia Drogasil SA is 1.05 times less risky than Equatorial Energia. It trades about 0.02 of its potential returns per unit of risk. Equatorial Energia SA is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 2,589 in Equatorial Energia SA on August 28, 2024 and sell it today you would earn a total of 701.00 from holding Equatorial Energia SA or generate 27.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Raia Drogasil SA vs. Equatorial Energia SA
Performance |
| Timeline |
| Raia Drogasil SA |
| Equatorial Energia |
Raia Drogasil and Equatorial Energia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Raia Drogasil and Equatorial Energia
The main advantage of trading using opposite Raia Drogasil and Equatorial Energia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Raia Drogasil position performs unexpectedly, Equatorial 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 Equatorial Energia will offset losses from the drop in Equatorial Energia's long position.| Raia Drogasil vs. Minerva SA | Raia Drogasil vs. Companhia Siderrgica Nacional | Raia Drogasil vs. Cyrela Brazil Realty |
| Equatorial Energia vs. BB Seguridade Participacoes | Equatorial Energia vs. Engie Brasil Energia | Equatorial Energia vs. CTEEP Companhia | Equatorial 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
Other Complementary Tools
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio |