Correlation Between Companhia Energética and Companhia Energética

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

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

Diversification Opportunities for Companhia Energética and Companhia Energética

0.09

Correlation Coefficient

Companhia Energética  Companhia Energética

Significant diversification

The 3 months correlation between Companhia and Companhia is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Companhia Energtica de and Companhia Energtica de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Companhia Energética and Companhia Energética 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 Companhia Energtica de 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 Companhia Energética i.e., Companhia Energética and Companhia Energética go up and down completely randomly.

Pair Corralation between Companhia Energética and Companhia Energética

Assuming the 90 days horizon Companhia Energética is expected to generate 29.98 times less return on investment than Companhia Energética. But when comparing it to its historical volatility, Companhia Energtica de is 3.9 times less risky than Companhia Energética. It trades about 0.01 of its potential returns per unit of risk. Companhia Energtica de is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  165.00  in Companhia Energtica de on October 7, 2024 and sell it today you would earn a total of  10.00  from holding Companhia Energtica de or generate 6.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	96.72%
Values	Daily Returns

Companhia Energtica de  vs.  Companhia Energtica de

Companhia Energética

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Companhia Energtica de has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Companhia Energética 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

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Companhia Energtica de are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain fundamental indicators, Companhia Energética may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Companhia Energética and Companhia Energética

The main advantage of trading using opposite Companhia Energética and Companhia Energética positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Companhia Energética 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 Companhia Energtica de 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.

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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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.