Correlation Between Fundo De and Elektro Redes

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

By analyzing existing cross correlation between Fundo De Investimento and Elektro Redes SA, you can compare the effects of market volatilities on Fundo De and Elektro Redes 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 Fundo De with a short position of Elektro Redes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fundo De and Elektro Redes.

Diversification Opportunities for Fundo De and Elektro Redes

-0.41

Correlation Coefficient

Fundo De  Elektro Redes

Very good diversification

The 3 months correlation between Fundo and Elektro is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Fundo De Investimento and Elektro Redes SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elektro Redes SA and Fundo De 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 Fundo De Investimento are associated (or correlated) with Elektro Redes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elektro Redes SA has no effect on the direction of Fundo De i.e., Fundo De and Elektro Redes go up and down completely randomly.

Pair Corralation between Fundo De and Elektro Redes

Assuming the 90 days trading horizon Fundo De Investimento is expected to under-perform the Elektro Redes. But the fund apears to be less risky and, when comparing its historical volatility, Fundo De Investimento is 1.65 times less risky than Elektro Redes. The fund trades about -0.01 of its potential returns per unit of risk. The Elektro Redes SA is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  3,593  in Elektro Redes SA on September 27, 2024 and sell it today you would earn a total of  1,507  from holding Elektro Redes SA or generate 41.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.4%
Values	Daily Returns

Fundo De Investimento  vs.  Elektro Redes SA

Fundo De Investimento

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fundo De Investimento has generated negative risk-adjusted returns adding no value to fund investors. Despite somewhat strong basic indicators, Fundo De is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Elektro Redes SA

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Elektro Redes SA are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Elektro Redes unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fundo De and Elektro Redes

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

The idea behind Fundo De Investimento and Elektro Redes SA 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 Transaction History module to view history of all your transactions and understand their impact on performance.