Correlation Between Companhiade Eletricidade and Equatorial Maranho

Can any of the company-specific risk be diversified away by investing in both Companhiade Eletricidade and Equatorial Maranho 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 Companhiade Eletricidade and Equatorial Maranho into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Companhiade Eletricidade do and Equatorial Maranho Distribuidora, you can compare the effects of market volatilities on Companhiade Eletricidade and Equatorial Maranho 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 Companhiade Eletricidade with a short position of Equatorial Maranho. Check out your portfolio center. Please also check ongoing floating volatility patterns of Companhiade Eletricidade and Equatorial Maranho.

Diversification Opportunities for Companhiade Eletricidade and Equatorial Maranho

-0.25

Correlation Coefficient

Companhiade Eletricidade  Equatorial Maranho

Very good diversification

The 3 months correlation between Companhiade and Equatorial is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Companhiade Eletricidade do and Equatorial Maranho Distribuido in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equatorial Maranho and Companhiade Eletricidade 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 Companhiade Eletricidade do are associated (or correlated) with Equatorial Maranho. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equatorial Maranho has no effect on the direction of Companhiade Eletricidade i.e., Companhiade Eletricidade and Equatorial Maranho go up and down completely randomly.

Pair Corralation between Companhiade Eletricidade and Equatorial Maranho

Assuming the 90 days trading horizon Companhiade Eletricidade do is expected to generate 0.85 times more return on investment than Equatorial Maranho. However, Companhiade Eletricidade do is 1.18 times less risky than Equatorial Maranho. It trades about 0.02 of its potential returns per unit of risk. Equatorial Maranho Distribuidora is currently generating about -0.05 per unit of risk. If you would invest  3,685  in Companhiade Eletricidade do on October 7, 2024 and sell it today you would earn a total of  215.00  from holding Companhiade Eletricidade do or generate 5.83% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	91.9%
Values	Daily Returns

Companhiade Eletricidade do  vs.  Equatorial Maranho Distribuido

Companhiade Eletricidade

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Companhiade Eletricidade do are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Companhiade Eletricidade is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Equatorial Maranho

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Equatorial Maranho Distribuidora has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong primary indicators, Equatorial Maranho is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Companhiade Eletricidade and Equatorial Maranho

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

The idea behind Companhiade Eletricidade do and Equatorial Maranho Distribuidora 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.