Correlation Between CTEEP Companhia and Companhiade Eletricidade
Can any of the company-specific risk be diversified away by investing in both CTEEP Companhia and Companhiade Eletricidade 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 Companhiade Eletricidade into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CTEEP Companhia and Companhiade Eletricidade do, you can compare the effects of market volatilities on CTEEP Companhia and Companhiade Eletricidade 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 Companhiade Eletricidade. Check out your portfolio center. Please also check ongoing floating volatility patterns of CTEEP Companhia and Companhiade Eletricidade.
Diversification Opportunities for CTEEP Companhia and Companhiade Eletricidade
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between CTEEP and Companhiade is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding CTEEP Companhia and Companhiade Eletricidade do in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Companhiade Eletricidade 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 Companhiade Eletricidade. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Companhiade Eletricidade has no effect on the direction of CTEEP Companhia i.e., CTEEP Companhia and Companhiade Eletricidade go up and down completely randomly.
Pair Corralation between CTEEP Companhia and Companhiade Eletricidade
Assuming the 90 days trading horizon CTEEP Companhia is expected to generate 1.29 times more return on investment than Companhiade Eletricidade. However, CTEEP Companhia is 1.29 times more volatile than Companhiade Eletricidade do. It trades about 0.08 of its potential returns per unit of risk. Companhiade Eletricidade do is currently generating about -0.18 per unit of risk. If you would invest 3,090 in CTEEP Companhia on September 1, 2024 and sell it today you would earn a total of 61.00 from holding CTEEP Companhia or generate 1.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CTEEP Companhia vs. Companhiade Eletricidade do
Performance |
| Timeline |
| CTEEP Companhia |
| Companhiade Eletricidade |
CTEEP Companhia and Companhiade Eletricidade Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CTEEP Companhia and Companhiade Eletricidade
The main advantage of trading using opposite CTEEP Companhia and Companhiade Eletricidade positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CTEEP Companhia position performs unexpectedly, Companhiade Eletricidade 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 Companhiade Eletricidade will offset losses from the drop in Companhiade Eletricidade's long position.| CTEEP Companhia vs. Transmissora Aliana de | CTEEP Companhia vs. CTEEP Companhia | CTEEP Companhia vs. Companhia Paranaense de | CTEEP Companhia vs. Companhia Energtica de |
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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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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