Correlation Between AES Corp and Companhia Energetica

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

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

Diversification Opportunities for AES Corp and Companhia Energetica

0.0

Correlation Coefficient

AES Corp  Companhia Energetica

Pay attention - limited upside

The 3 months correlation between AES and Companhia is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding AES Corp Unit and Companhia Energetica de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Companhia Energetica and AES Corp 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 AES Corp Unit are associated (or correlated) with Companhia Energetica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Companhia Energetica has no effect on the direction of AES Corp i.e., AES Corp and Companhia Energetica go up and down completely randomly.

Pair Corralation between AES Corp and Companhia Energetica

If you would invest  179.00  in Companhia Energetica de on December 28, 2024 and sell it today you would earn a total of  2.00  from holding Companhia Energetica de or generate 1.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

AES Corp Unit  vs.  Companhia Energetica de

AES Corp Unit

Risk-Adjusted Performance

Very Weak

Over the last 90 days AES Corp Unit has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, AES Corp is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Companhia Energetica

Risk-Adjusted Performance

Weak

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

Pair Trading with AES Corp and Companhia Energetica

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

The idea behind AES Corp Unit and Companhia Energetica 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.

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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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.