Correlation Between Edesa Holding and Empresa Distribuidora

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

By analyzing existing cross correlation between Edesa Holding SA and Empresa Distribuidora y, you can compare the effects of market volatilities on Edesa Holding and Empresa Distribuidora 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 Edesa Holding with a short position of Empresa Distribuidora. Check out your portfolio center. Please also check ongoing floating volatility patterns of Edesa Holding and Empresa Distribuidora.

Diversification Opportunities for Edesa Holding and Empresa Distribuidora

0.0

Correlation Coefficient

Edesa Holding  Empresa Distribuidora

Pay attention - limited upside

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

Pair Corralation between Edesa Holding and Empresa Distribuidora

Assuming the 90 days trading horizon Edesa Holding is expected to generate 141.73 times less return on investment than Empresa Distribuidora. But when comparing it to its historical volatility, Edesa Holding SA is 3.34 times less risky than Empresa Distribuidora. It trades about 0.0 of its potential returns per unit of risk. Empresa Distribuidora y is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  14,980  in Empresa Distribuidora y on December 2, 2024 and sell it today you would earn a total of  193,020  from holding Empresa Distribuidora y or generate 1288.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.38%
Values	Daily Returns

Edesa Holding SA  vs.  Empresa Distribuidora y

Edesa Holding SA

Risk-Adjusted Performance

Very Weak

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

Empresa Distribuidora

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Edesa Holding and Empresa Distribuidora

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

The idea behind Edesa Holding SA and Empresa Distribuidora y 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.