Correlation Between Engie Brasil and Plascar Participaes

Can any of the company-specific risk be diversified away by investing in both Engie Brasil and Plascar Participaes 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 Engie Brasil and Plascar Participaes into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Engie Brasil Energia and Plascar Participaes Industriais, you can compare the effects of market volatilities on Engie Brasil and Plascar Participaes 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 Engie Brasil with a short position of Plascar Participaes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Engie Brasil and Plascar Participaes.

Diversification Opportunities for Engie Brasil and Plascar Participaes

0.34

Correlation Coefficient

Engie Brasil  Plascar Participaes

Weak diversification

The 3 months correlation between Engie and Plascar is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Engie Brasil Energia and Plascar Participaes Industriai in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Plascar Participaes and Engie Brasil 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 Engie Brasil Energia are associated (or correlated) with Plascar Participaes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Plascar Participaes has no effect on the direction of Engie Brasil i.e., Engie Brasil and Plascar Participaes go up and down completely randomly.

Pair Corralation between Engie Brasil and Plascar Participaes

Assuming the 90 days trading horizon Engie Brasil is expected to generate 1.4 times less return on investment than Plascar Participaes. But when comparing it to its historical volatility, Engie Brasil Energia is 5.06 times less risky than Plascar Participaes. It trades about 0.16 of its potential returns per unit of risk. Plascar Participaes Industriais is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  575.00  in Plascar Participaes Industriais on December 23, 2024 and sell it today you would earn a total of  37.00  from holding Plascar Participaes Industriais or generate 6.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Engie Brasil Energia  vs.  Plascar Participaes Industriai

Engie Brasil Energia

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Engie Brasil Energia are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Engie Brasil may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Plascar Participaes

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Plascar Participaes Industriais are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Plascar Participaes unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Engie Brasil and Plascar Participaes

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

The idea behind Engie Brasil Energia and Plascar Participaes Industriais 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.