Correlation Between SSE PLC and Companhia Energtica
Can any of the company-specific risk be diversified away by investing in both SSE PLC and Companhia Energtica 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 SSE PLC and Companhia Energtica into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SSE PLC ADR and Companhia Energtica de, you can compare the effects of market volatilities on SSE PLC and Companhia Energtica 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 SSE PLC with a short position of Companhia Energtica. Check out your portfolio center. Please also check ongoing floating volatility patterns of SSE PLC and Companhia Energtica.
Diversification Opportunities for SSE PLC and Companhia Energtica
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between SSE and Companhia is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding SSE PLC ADR and Companhia Energtica de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Companhia Energtica and SSE PLC 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 SSE PLC ADR are associated (or correlated) with Companhia Energtica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Companhia Energtica has no effect on the direction of SSE PLC i.e., SSE PLC and Companhia Energtica go up and down completely randomly.
Pair Corralation between SSE PLC and Companhia Energtica
Assuming the 90 days trading horizon SSE PLC ADR is expected to under-perform the Companhia Energtica. But the stock apears to be less risky and, when comparing its historical volatility, SSE PLC ADR is 3.12 times less risky than Companhia Energtica. The stock trades about -0.09 of its potential returns per unit of risk. The Companhia Energtica de is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 157.00 in Companhia Energtica de on November 2, 2024 and sell it today you would earn a total of 23.00 from holding Companhia Energtica de or generate 14.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SSE PLC ADR vs. Companhia Energtica de
Performance |
| Timeline |
| SSE PLC ADR |
| Companhia Energtica |
SSE PLC and Companhia Energtica Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SSE PLC and Companhia Energtica
The main advantage of trading using opposite SSE PLC and Companhia Energtica positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SSE PLC position performs unexpectedly, Companhia Energtica 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 Companhia Energtica will offset losses from the drop in Companhia Energtica's long position.| SSE PLC vs. WIMFARM SA EO | SSE PLC vs. Daito Trust Construction | SSE PLC vs. INTER CARS SA | SSE PLC vs. Motorcar Parts of |
| Companhia Energtica vs. IBERDROLA ADR1 EO | Companhia Energtica vs. SSE PLC ADR | Companhia Energtica vs. C PARAN EN | Companhia Energtica vs. CIA ENGER ADR |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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