Correlation Between Rede Energia and Inepar SA
Can any of the company-specific risk be diversified away by investing in both Rede Energia and Inepar SA 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 Rede Energia and Inepar SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rede Energia Participaes and Inepar SA Indstria, you can compare the effects of market volatilities on Rede Energia and Inepar SA 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 Rede Energia with a short position of Inepar SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rede Energia and Inepar SA.
Diversification Opportunities for Rede Energia and Inepar SA
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Rede and Inepar is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Rede Energia Participaes and Inepar SA Indstria in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inepar SA Indstria and Rede Energia 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 Rede Energia Participaes are associated (or correlated) with Inepar SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inepar SA Indstria has no effect on the direction of Rede Energia i.e., Rede Energia and Inepar SA go up and down completely randomly.
Pair Corralation between Rede Energia and Inepar SA
Assuming the 90 days trading horizon Rede Energia Participaes is expected to generate 0.63 times more return on investment than Inepar SA. However, Rede Energia Participaes is 1.59 times less risky than Inepar SA. It trades about -0.01 of its potential returns per unit of risk. Inepar SA Indstria is currently generating about -0.38 per unit of risk. If you would invest 664.00 in Rede Energia Participaes on August 30, 2024 and sell it today you would lose (2.00) from holding Rede Energia Participaes or give up 0.3% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Rede Energia Participaes vs. Inepar SA Indstria
Performance |
Timeline |
Rede Energia Participaes |
Inepar SA Indstria |
Rede Energia and Inepar SA Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Rede Energia and Inepar SA
The main advantage of trading using opposite Rede Energia and Inepar SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rede Energia position performs unexpectedly, Inepar SA 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 Inepar SA will offset losses from the drop in Inepar SA's long position.Rede Energia vs. CTEEP Companhia | Rede Energia vs. Empresa Metropolitana de | Rede Energia vs. Energisa SA | Rede Energia vs. Energisa SA |
Inepar SA vs. Inepar SA Indstria | Inepar SA vs. Lupatech SA | Inepar SA vs. Triunfo Participaes e | Inepar SA vs. Viver Incorporadora e |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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