Correlation Between Companhia and CCR SA
Can any of the company-specific risk be diversified away by investing in both Companhia and CCR 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 Companhia and CCR SA 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 CCR SA, you can compare the effects of market volatilities on Companhia and CCR 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 Companhia with a short position of CCR SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Companhia and CCR SA.
Diversification Opportunities for Companhia and CCR SA
Very weak diversification
The 3 months correlation between Companhia and CCR is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Companhia de Saneamento and CCR SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CCR SA 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 CCR SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CCR SA has no effect on the direction of Companhia i.e., Companhia and CCR SA go up and down completely randomly.
Pair Corralation between Companhia and CCR SA
Assuming the 90 days trading horizon Companhia de Saneamento is expected to generate 1.0 times more return on investment than CCR SA. However, Companhia is 1.0 times more volatile than CCR SA. It trades about 0.21 of its potential returns per unit of risk. CCR SA is currently generating about 0.13 per unit of risk. If you would invest 8,719 in Companhia de Saneamento on October 20, 2024 and sell it today you would earn a total of 581.00 from holding Companhia de Saneamento or generate 6.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Companhia de Saneamento vs. CCR SA
Performance |
| Timeline |
| Companhia de Saneamento |
| CCR SA |
Companhia and CCR SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Companhia and CCR SA
The main advantage of trading using opposite Companhia and CCR SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Companhia position performs unexpectedly, CCR 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 CCR SA will offset losses from the drop in CCR SA's long position.| Companhia vs. CCR SA | Companhia vs. Centrais Eltricas Brasileiras | Companhia vs. Companhia Energtica de | Companhia vs. Centrais Eltricas Brasileiras |
| CCR SA vs. EcoRodovias Infraestrutura e | CCR SA vs. Companhia de Saneamento | CCR SA vs. Companhia Energtica de | CCR SA vs. Cosan SA |
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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