Correlation Between Centrais Electricas and Cielo SA

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

By analyzing existing cross correlation between Centrais Electricas Brasileiras and Cielo SA, you can compare the effects of market volatilities on Centrais Electricas and Cielo SA 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 Electricas with a short position of Cielo SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Centrais Electricas and Cielo SA.

Diversification Opportunities for Centrais Electricas and Cielo SA

0.0

Correlation Coefficient

Centrais Electricas  Cielo SA

Pay attention - limited upside

The 3 months correlation between Centrais and Cielo is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Centrais Electricas Brasileira and Cielo SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cielo SA and Centrais Electricas 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 Electricas Brasileiras are associated (or correlated) with Cielo SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cielo SA has no effect on the direction of Centrais Electricas i.e., Centrais Electricas and Cielo SA go up and down completely randomly.

Pair Corralation between Centrais Electricas and Cielo SA

If you would invest  560.00  in Centrais Electricas Brasileiras on December 29, 2024 and sell it today you would earn a total of  154.00  from holding Centrais Electricas Brasileiras or generate 27.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Centrais Electricas Brasileira  vs.  Cielo SA

Centrais Electricas

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Centrais Electricas Brasileiras are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady fundamental drivers, Centrais Electricas reported solid returns over the last few months and may actually be approaching a breakup point.

Cielo SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cielo SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Cielo SA 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 Electricas and Cielo SA

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

The idea behind Centrais Electricas Brasileiras and Cielo 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.