Correlation Between Sony and Companhia Energtica
Can any of the company-specific risk be diversified away by investing in both Sony 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 Sony and Companhia Energtica into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sony Group and Companhia Energtica de, you can compare the effects of market volatilities on Sony 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 Sony with a short position of Companhia Energtica. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sony and Companhia Energtica.
Diversification Opportunities for Sony and Companhia Energtica
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Sony and Companhia is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Sony Group and Companhia Energtica de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Companhia Energtica and Sony 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 Sony Group 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 Sony i.e., Sony and Companhia Energtica go up and down completely randomly.
Pair Corralation between Sony and Companhia Energtica
Assuming the 90 days trading horizon Sony Group is expected to generate 8.46 times more return on investment than Companhia Energtica. However, Sony is 8.46 times more volatile than Companhia Energtica de. It trades about 0.04 of its potential returns per unit of risk. Companhia Energtica de is currently generating about 0.01 per unit of risk. If you would invest 31,600 in Sony Group on September 2, 2024 and sell it today you would earn a total of 9,200 from holding Sony Group or generate 29.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 96.98% |
| Values | Daily Returns |
Sony Group vs. Companhia Energtica de
Performance |
| Timeline |
| Sony Group |
| Companhia Energtica |
Sony and Companhia Energtica Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sony and Companhia Energtica
The main advantage of trading using opposite Sony and Companhia Energtica positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sony 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.The idea behind Sony Group and Companhia Energtica de pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Companhia Energtica vs. United States Steel | Companhia Energtica vs. Southern Copper | Companhia Energtica vs. New Oriental Education | Companhia Energtica vs. Deutsche Bank Aktiengesellschaft |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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