Correlation Between Boa Safra and Energisa
Can any of the company-specific risk be diversified away by investing in both Boa Safra and Energisa 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 Boa Safra and Energisa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Boa Safra Sementes and Energisa SA, you can compare the effects of market volatilities on Boa Safra and Energisa 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 Boa Safra with a short position of Energisa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boa Safra and Energisa.
Diversification Opportunities for Boa Safra and Energisa
Very weak diversification
The 3 months correlation between Boa and Energisa is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Boa Safra Sementes and Energisa SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Energisa SA and Boa Safra 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 Boa Safra Sementes are associated (or correlated) with Energisa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Energisa SA has no effect on the direction of Boa Safra i.e., Boa Safra and Energisa go up and down completely randomly.
Pair Corralation between Boa Safra and Energisa
Assuming the 90 days trading horizon Boa Safra Sementes is expected to under-perform the Energisa. In addition to that, Boa Safra is 1.57 times more volatile than Energisa SA. It trades about -0.13 of its total potential returns per unit of risk. Energisa SA is currently generating about -0.1 per unit of volatility. If you would invest 4,190 in Energisa SA on September 2, 2024 and sell it today you would lose (169.00) from holding Energisa SA or give up 4.03% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Boa Safra Sementes vs. Energisa SA
Performance |
| Timeline |
| Boa Safra Sementes |
| Energisa SA |
Boa Safra and Energisa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Boa Safra and Energisa
The main advantage of trading using opposite Boa Safra and Energisa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boa Safra position performs unexpectedly, Energisa 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 Energisa will offset losses from the drop in Energisa's long position.| Boa Safra vs. Ambipar Participaes e | Boa Safra vs. Vamos Locao de | Boa Safra vs. Petroreconcavo SA | Boa Safra vs. Fras le SA |
| Energisa vs. Equatorial Energia SA | Energisa vs. CPFL Energia SA | Energisa vs. Eneva SA | Energisa vs. Companhia de Saneamento |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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