Correlation Between Companhia and CASAN Companhia
Can any of the company-specific risk be diversified away by investing in both Companhia and CASAN Companhia 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 Companhia and CASAN Companhia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Companhia de Saneamento and CASAN Companhia, you can compare the effects of market volatilities on Companhia and CASAN Companhia 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 Companhia with a short position of CASAN Companhia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Companhia and CASAN Companhia.
Diversification Opportunities for Companhia and CASAN Companhia
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Companhia and CASAN is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Companhia de Saneamento and CASAN Companhia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CASAN Companhia and Companhia 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 Companhia de Saneamento are associated (or correlated) with CASAN Companhia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CASAN Companhia has no effect on the direction of Companhia i.e., Companhia and CASAN Companhia go up and down completely randomly.
Pair Corralation between Companhia and CASAN Companhia
Assuming the 90 days trading horizon Companhia de Saneamento is expected to generate 2.82 times more return on investment than CASAN Companhia. However, Companhia is 2.82 times more volatile than CASAN Companhia. It trades about 0.05 of its potential returns per unit of risk. CASAN Companhia is currently generating about -0.06 per unit of risk. If you would invest 7,897 in Companhia de Saneamento on November 3, 2024 and sell it today you would earn a total of 1,560 from holding Companhia de Saneamento or generate 19.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.2% |
| Values | Daily Returns |
Companhia de Saneamento vs. CASAN Companhia
Performance |
| Timeline |
| Companhia de Saneamento |
| CASAN Companhia |
Companhia and CASAN Companhia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Companhia and CASAN Companhia
The main advantage of trading using opposite Companhia and CASAN Companhia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Companhia position performs unexpectedly, CASAN Companhia 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 CASAN Companhia will offset losses from the drop in CASAN Companhia's long position.| Companhia vs. CCR SA | Companhia vs. Centrais Eltricas Brasileiras | Companhia vs. Companhia Energtica de | Companhia vs. Centrais Eltricas Brasileiras |
| CASAN Companhia vs. Prudential Financial | CASAN Companhia vs. Spotify Technology SA | CASAN Companhia vs. Credit Acceptance | CASAN Companhia vs. New Oriental Education |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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