Correlation Between Engie Brasil and Tupy SA

Can any of the company-specific risk be diversified away by investing in both Engie Brasil and Tupy 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 Engie Brasil and Tupy SA 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 Tupy SA, you can compare the effects of market volatilities on Engie Brasil and Tupy 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 Engie Brasil with a short position of Tupy SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Engie Brasil and Tupy SA.

Diversification Opportunities for Engie Brasil and Tupy SA

-0.73

Correlation Coefficient

Engie Brasil  Tupy SA

Pay attention - limited upside

The 3 months correlation between Engie and Tupy is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Engie Brasil Energia and Tupy SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tupy SA 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 Tupy SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tupy SA has no effect on the direction of Engie Brasil i.e., Engie Brasil and Tupy SA go up and down completely randomly.

Pair Corralation between Engie Brasil and Tupy SA

Assuming the 90 days trading horizon Engie Brasil Energia is expected to generate 0.43 times more return on investment than Tupy SA. However, Engie Brasil Energia is 2.31 times less risky than Tupy SA. It trades about 0.17 of its potential returns per unit of risk. Tupy SA is currently generating about -0.2 per unit of risk. If you would invest  3,550  in Engie Brasil Energia on December 30, 2024 and sell it today you would earn a total of  357.00  from holding Engie Brasil Energia or generate 10.06% return on investment over 90 days.

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

Engie Brasil Energia  vs.  Tupy SA

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 13 (%) 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.

Tupy SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Tupy SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Engie Brasil and Tupy SA

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

The idea behind Engie Brasil Energia and Tupy 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.

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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.