Correlation Between CTEEP Companhia and Eternit SA
Can any of the company-specific risk be diversified away by investing in both CTEEP Companhia and Eternit SA 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 Eternit SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CTEEP Companhia and Eternit SA, you can compare the effects of market volatilities on CTEEP Companhia and Eternit SA 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 Eternit SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of CTEEP Companhia and Eternit SA.
Diversification Opportunities for CTEEP Companhia and Eternit SA
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between CTEEP and Eternit is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding CTEEP Companhia and Eternit SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eternit SA 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 Eternit SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eternit SA has no effect on the direction of CTEEP Companhia i.e., CTEEP Companhia and Eternit SA go up and down completely randomly.
Pair Corralation between CTEEP Companhia and Eternit SA
Assuming the 90 days trading horizon CTEEP Companhia is expected to generate 29.82 times less return on investment than Eternit SA. But when comparing it to its historical volatility, CTEEP Companhia is 2.63 times less risky than Eternit SA. It trades about 0.03 of its potential returns per unit of risk. Eternit SA is currently generating about 0.38 of returns per unit of risk over similar time horizon. If you would invest 512.00 in Eternit SA on August 30, 2024 and sell it today you would earn a total of 119.00 from holding Eternit SA or generate 23.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CTEEP Companhia vs. Eternit SA
Performance |
| Timeline |
| CTEEP Companhia |
| Eternit SA |
CTEEP Companhia and Eternit SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CTEEP Companhia and Eternit SA
The main advantage of trading using opposite CTEEP Companhia and Eternit SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CTEEP Companhia position performs unexpectedly, Eternit SA 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 Eternit SA will offset losses from the drop in Eternit SA's long position.| CTEEP Companhia vs. Centrais Eltricas Brasileiras | CTEEP Companhia vs. Centrais Eltricas Brasileiras | CTEEP Companhia vs. Energisa SA | CTEEP Companhia vs. Energisa Mato Grosso |
| Eternit SA vs. Marcopolo SA | Eternit SA vs. Randon SA Implementos | Eternit SA vs. Companhia Siderrgica Nacional | Eternit SA vs. Positivo Tecnologia SA |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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