Correlation Between Societatea Energetica and Infinity Capital

Can any of the company-specific risk be diversified away by investing in both Societatea Energetica and Infinity Capital 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 Societatea Energetica and Infinity Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Societatea Energetica Electrica and Infinity Capital Investments, you can compare the effects of market volatilities on Societatea Energetica and Infinity Capital 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 Societatea Energetica with a short position of Infinity Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Societatea Energetica and Infinity Capital.

Diversification Opportunities for Societatea Energetica and Infinity Capital

0.38

Correlation Coefficient

Societatea Energetica  Infinity Capital

Weak diversification

The 3 months correlation between Societatea and Infinity is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Societatea Energetica Electric and Infinity Capital Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Infinity Capital Inv and Societatea Energetica 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 Societatea Energetica Electrica are associated (or correlated) with Infinity Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Infinity Capital Inv has no effect on the direction of Societatea Energetica i.e., Societatea Energetica and Infinity Capital go up and down completely randomly.

Pair Corralation between Societatea Energetica and Infinity Capital

Assuming the 90 days horizon Societatea Energetica Electrica is expected to generate 1.72 times more return on investment than Infinity Capital. However, Societatea Energetica is 1.72 times more volatile than Infinity Capital Investments. It trades about -0.02 of its potential returns per unit of risk. Infinity Capital Investments is currently generating about -0.07 per unit of risk. If you would invest  1,320  in Societatea Energetica Electrica on December 30, 2024 and sell it today you would lose (42.00) from holding Societatea Energetica Electrica or give up 3.18% of portfolio value over 90 days.

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

Societatea Energetica Electric  vs.  Infinity Capital Investments

Societatea Energetica

Risk-Adjusted Performance

Very Weak

Over the last 90 days Societatea Energetica Electrica has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Societatea Energetica is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Infinity Capital Inv

Risk-Adjusted Performance

Very Weak

Over the last 90 days Infinity Capital Investments has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Infinity Capital is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Societatea Energetica and Infinity Capital

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

The idea behind Societatea Energetica Electrica and Infinity Capital Investments 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.