Correlation Between ENGIE Brasil and REMEDY ENTERTAINMENT

Can any of the company-specific risk be diversified away by investing in both ENGIE Brasil and REMEDY ENTERTAINMENT 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 ENGIE Brasil and REMEDY ENTERTAINMENT into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ENGIE Brasil Energia and REMEDY ENTERTAINMENT OYJ, you can compare the effects of market volatilities on ENGIE Brasil and REMEDY ENTERTAINMENT 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 ENGIE Brasil with a short position of REMEDY ENTERTAINMENT. Check out your portfolio center. Please also check ongoing floating volatility patterns of ENGIE Brasil and REMEDY ENTERTAINMENT.

Diversification Opportunities for ENGIE Brasil and REMEDY ENTERTAINMENT

-0.29

Correlation Coefficient

ENGIE Brasil  REMEDY ENTERTAINMENT

Very good diversification

The 3 months correlation between ENGIE and REMEDY is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding ENGIE Brasil Energia and REMEDY ENTERTAINMENT OYJ in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on REMEDY ENTERTAINMENT OYJ and ENGIE Brasil 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 ENGIE Brasil Energia are associated (or correlated) with REMEDY ENTERTAINMENT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of REMEDY ENTERTAINMENT OYJ has no effect on the direction of ENGIE Brasil i.e., ENGIE Brasil and REMEDY ENTERTAINMENT go up and down completely randomly.

Pair Corralation between ENGIE Brasil and REMEDY ENTERTAINMENT

Assuming the 90 days trading horizon ENGIE Brasil Energia is expected to generate 1.44 times more return on investment than REMEDY ENTERTAINMENT. However, ENGIE Brasil is 1.44 times more volatile than REMEDY ENTERTAINMENT OYJ. It trades about 0.08 of its potential returns per unit of risk. REMEDY ENTERTAINMENT OYJ is currently generating about 0.02 per unit of risk. If you would invest  540.00  in ENGIE Brasil Energia on December 21, 2024 and sell it today you would earn a total of  70.00  from holding ENGIE Brasil Energia or generate 12.96% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

ENGIE Brasil Energia  vs.  REMEDY ENTERTAINMENT OYJ

ENGIE Brasil Energia

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ENGIE Brasil Energia are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, ENGIE Brasil unveiled solid returns over the last few months and may actually be approaching a breakup point.

REMEDY ENTERTAINMENT OYJ

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in REMEDY ENTERTAINMENT OYJ are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, REMEDY ENTERTAINMENT is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with ENGIE Brasil and REMEDY ENTERTAINMENT

The main advantage of trading using opposite ENGIE Brasil and REMEDY ENTERTAINMENT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ENGIE Brasil position performs unexpectedly, REMEDY ENTERTAINMENT 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 REMEDY ENTERTAINMENT will offset losses from the drop in REMEDY ENTERTAINMENT's long position.

The idea behind ENGIE Brasil Energia and REMEDY ENTERTAINMENT OYJ 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.

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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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.