Correlation Between Companhia Paranaense and Electricite

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

By analyzing existing cross correlation between Companhia Paranaense de and Electricite De France, you can compare the effects of market volatilities on Companhia Paranaense and Electricite 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 Companhia Paranaense with a short position of Electricite. Check out your portfolio center. Please also check ongoing floating volatility patterns of Companhia Paranaense and Electricite.

Diversification Opportunities for Companhia Paranaense and Electricite

0.0

Correlation Coefficient

Companhia Paranaense  Electricite

Pay attention - limited upside

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

Pair Corralation between Companhia Paranaense and Electricite

If you would invest  632.00  in Companhia Paranaense de on November 29, 2024 and sell it today you would earn a total of  68.00  from holding Companhia Paranaense de or generate 10.76% return on investment over 90 days.

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

Companhia Paranaense de  vs.  Electricite De France

Companhia Paranaense

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Companhia Paranaense de are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively conflicting essential indicators, Companhia Paranaense may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Electricite De France

Risk-Adjusted Performance

Very Weak

Over the last 90 days Electricite De France has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical and fundamental indicators, Electricite is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Companhia Paranaense and Electricite

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

The idea behind Companhia Paranaense de and Electricite De France 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.