Correlation Between MITSUBISHI KAKOKI and Companhia Energética

Can any of the company-specific risk be diversified away by investing in both MITSUBISHI KAKOKI and Companhia Energética 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 MITSUBISHI KAKOKI and Companhia Energética into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between MITSUBISHI KAKOKI and Companhia Energtica de, you can compare the effects of market volatilities on MITSUBISHI KAKOKI and Companhia Energética 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 MITSUBISHI KAKOKI with a short position of Companhia Energética. Check out your portfolio center. Please also check ongoing floating volatility patterns of MITSUBISHI KAKOKI and Companhia Energética.

Diversification Opportunities for MITSUBISHI KAKOKI and Companhia Energética

-0.01

Correlation Coefficient

MITSUBISHI KAKOKI  Companhia Energética

Good diversification

The 3 months correlation between MITSUBISHI and Companhia is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding MITSUBISHI KAKOKI and Companhia Energtica de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Companhia Energética and MITSUBISHI KAKOKI 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 MITSUBISHI KAKOKI are associated (or correlated) with Companhia Energética. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Companhia Energética has no effect on the direction of MITSUBISHI KAKOKI i.e., MITSUBISHI KAKOKI and Companhia Energética go up and down completely randomly.

Pair Corralation between MITSUBISHI KAKOKI and Companhia Energética

Assuming the 90 days horizon MITSUBISHI KAKOKI is expected to generate 1.81 times less return on investment than Companhia Energética. But when comparing it to its historical volatility, MITSUBISHI KAKOKI is 2.43 times less risky than Companhia Energética. It trades about 0.28 of its potential returns per unit of risk. Companhia Energtica de is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  156.00  in Companhia Energtica de on October 11, 2024 and sell it today you would earn a total of  21.00  from holding Companhia Energtica de or generate 13.46% return on investment over 90 days.

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

MITSUBISHI KAKOKI  vs.  Companhia Energtica de

MITSUBISHI KAKOKI

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in MITSUBISHI KAKOKI are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, MITSUBISHI KAKOKI is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Companhia Energética

Risk-Adjusted Performance

6 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Companhia Energtica de are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental indicators, Companhia Energética reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MITSUBISHI KAKOKI and Companhia Energética

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

The idea behind MITSUBISHI KAKOKI 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.

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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.