Correlation Between Centrais Eltricas and Equatorial Maranho

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

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

Diversification Opportunities for Centrais Eltricas and Equatorial Maranho

-0.12

Correlation Coefficient

Centrais Eltricas  Equatorial Maranho

Good diversification

The 3 months correlation between Centrais and Equatorial is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Centrais Eltricas de and Equatorial Maranho Distribuido in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equatorial Maranho and Centrais Eltricas 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 Centrais Eltricas de 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 Centrais Eltricas i.e., Centrais Eltricas and Equatorial Maranho go up and down completely randomly.

Pair Corralation between Centrais Eltricas and Equatorial Maranho

Assuming the 90 days trading horizon Centrais Eltricas de is expected to generate 2.31 times more return on investment than Equatorial Maranho. However, Centrais Eltricas is 2.31 times more volatile than Equatorial Maranho Distribuidora. It trades about 0.01 of its potential returns per unit of risk. Equatorial Maranho Distribuidora is currently generating about 0.0 per unit of risk. If you would invest  7,686  in Centrais Eltricas de on October 22, 2024 and sell it today you would earn a total of  14.00  from holding Centrais Eltricas de or generate 0.18% return on investment over 90 days.

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

Centrais Eltricas de  vs.  Equatorial Maranho Distribuido

Centrais Eltricas

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Centrais Eltricas de are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Centrais Eltricas may actually be approaching a critical reversion point that can send shares even higher in February 2025.

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 Centrais Eltricas and Equatorial Maranho

The main advantage of trading using opposite Centrais Eltricas and Equatorial Maranho positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Centrais Eltricas 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 Centrais Eltricas de 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.