Correlation Between Companhia Energética and PG +

Can any of the company-specific risk be diversified away by investing in both Companhia Energética and PG + 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 PG + 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 PG E P6, you can compare the effects of market volatilities on Companhia Energética and PG + 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 PG +. Check out your portfolio center. Please also check ongoing floating volatility patterns of Companhia Energética and PG +.

Diversification Opportunities for Companhia Energética and PG +

-0.33

Correlation Coefficient

Companhia Energética  PG +

Very good diversification

The 3 months correlation between Companhia and PCG6 is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Companhia Energtica de and PG E P6 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PG E P6 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 PG +. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PG E P6 has no effect on the direction of Companhia Energética i.e., Companhia Energética and PG + go up and down completely randomly.

Pair Corralation between Companhia Energética and PG +

Assuming the 90 days trading horizon Companhia Energtica de is expected to generate 3.22 times more return on investment than PG +. However, Companhia Energética is 3.22 times more volatile than PG E P6. It trades about 0.03 of its potential returns per unit of risk. PG E P6 is currently generating about -0.07 per unit of risk. If you would invest  166.00  in Companhia Energtica de on December 22, 2024 and sell it today you would earn a total of  4.00  from holding Companhia Energtica de or generate 2.41% return on investment over 90 days.

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

Companhia Energtica de  vs.  PG E P6

Companhia Energética

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Companhia Energtica de are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady fundamental indicators, Companhia Energética may actually be approaching a critical reversion point that can send shares even higher in April 2025.

PG E P6

Risk-Adjusted Performance

Very Weak

Over the last 90 days PG E P6 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Companhia Energética and PG +

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

The idea behind Companhia Energtica de and PG E P6 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.