Correlation Between CTEEP Companhia and Alupar Investimento
Can any of the company-specific risk be diversified away by investing in both CTEEP Companhia and Alupar Investimento 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 CTEEP Companhia and Alupar Investimento into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CTEEP Companhia and Alupar Investimento SA, you can compare the effects of market volatilities on CTEEP Companhia and Alupar Investimento 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 CTEEP Companhia with a short position of Alupar Investimento. Check out your portfolio center. Please also check ongoing floating volatility patterns of CTEEP Companhia and Alupar Investimento.
Diversification Opportunities for CTEEP Companhia and Alupar Investimento
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between CTEEP and Alupar is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding CTEEP Companhia and Alupar Investimento SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alupar Investimento and CTEEP 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 CTEEP Companhia are associated (or correlated) with Alupar Investimento. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alupar Investimento has no effect on the direction of CTEEP Companhia i.e., CTEEP Companhia and Alupar Investimento go up and down completely randomly.
Pair Corralation between CTEEP Companhia and Alupar Investimento
Assuming the 90 days trading horizon CTEEP Companhia is expected to generate 3.04 times less return on investment than Alupar Investimento. But when comparing it to its historical volatility, CTEEP Companhia is 1.91 times less risky than Alupar Investimento. It trades about 0.05 of its potential returns per unit of risk. Alupar Investimento SA is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 994.00 in Alupar Investimento SA on August 23, 2024 and sell it today you would earn a total of 24.00 from holding Alupar Investimento SA or generate 2.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
CTEEP Companhia vs. Alupar Investimento SA
Performance |
| Timeline |
| CTEEP Companhia |
| Alupar Investimento |
CTEEP Companhia and Alupar Investimento Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CTEEP Companhia and Alupar Investimento
The main advantage of trading using opposite CTEEP Companhia and Alupar Investimento positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CTEEP Companhia position performs unexpectedly, Alupar Investimento 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 Alupar Investimento will offset losses from the drop in Alupar Investimento's long position.| CTEEP Companhia vs. CTEEP Companhia | CTEEP Companhia vs. Companhia Paranaense de | CTEEP Companhia vs. Companhia Energtica de | CTEEP Companhia vs. Energisa SA |
| Alupar Investimento vs. BIONTECH SE DRN | Alupar Investimento vs. Planet Fitness | Alupar Investimento vs. Unity Software | Alupar Investimento vs. CVS Health |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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