Correlation Between Advent Technologies and Centrais Elétricas

Can any of the company-specific risk be diversified away by investing in both Advent Technologies and Centrais Elétricas 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 Advent Technologies and Centrais Elétricas into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Advent Technologies Holdings and Centrais Eltricas Brasileiras, you can compare the effects of market volatilities on Advent Technologies and Centrais Elétricas 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 Advent Technologies with a short position of Centrais Elétricas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advent Technologies and Centrais Elétricas.

Diversification Opportunities for Advent Technologies and Centrais Elétricas

-0.07

Correlation Coefficient

Advent Technologies  Centrais Elétricas

Good diversification

The 3 months correlation between Advent and Centrais is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Advent Technologies Holdings and Centrais Eltricas Brasileiras in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centrais Elétricas and Advent Technologies 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 Advent Technologies Holdings are associated (or correlated) with Centrais Elétricas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Centrais Elétricas has no effect on the direction of Advent Technologies i.e., Advent Technologies and Centrais Elétricas go up and down completely randomly.

Pair Corralation between Advent Technologies and Centrais Elétricas

Assuming the 90 days horizon Advent Technologies Holdings is expected to generate 6.38 times more return on investment than Centrais Elétricas. However, Advent Technologies is 6.38 times more volatile than Centrais Eltricas Brasileiras. It trades about 0.1 of its potential returns per unit of risk. Centrais Eltricas Brasileiras is currently generating about 0.2 per unit of risk. If you would invest  0.80  in Advent Technologies Holdings on December 30, 2024 and sell it today you would earn a total of  0.31  from holding Advent Technologies Holdings or generate 38.75% return on investment over 90 days.

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

Advent Technologies Holdings  vs.  Centrais Eltricas Brasileiras

Advent Technologies

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Advent Technologies Holdings are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Advent Technologies showed solid returns over the last few months and may actually be approaching a breakup point.

Centrais Elétricas

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Centrais Eltricas Brasileiras are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Centrais Elétricas sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Advent Technologies and Centrais Elétricas

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

The idea behind Advent Technologies Holdings and Centrais Eltricas Brasileiras 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.