Correlation Between Energisa and Btsp II

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

By analyzing existing cross correlation between Energisa SA and Btsp II Fundo, you can compare the effects of market volatilities on Energisa and Btsp II 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 Energisa with a short position of Btsp II. Check out your portfolio center. Please also check ongoing floating volatility patterns of Energisa and Btsp II.

Diversification Opportunities for Energisa and Btsp II

-0.65

Correlation Coefficient

Energisa  Btsp II

Excellent diversification

The 3 months correlation between Energisa and Btsp is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Energisa SA and Btsp II Fundo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Btsp II Fundo and Energisa 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 Energisa SA are associated (or correlated) with Btsp II. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Btsp II Fundo has no effect on the direction of Energisa i.e., Energisa and Btsp II go up and down completely randomly.

Pair Corralation between Energisa and Btsp II

Assuming the 90 days trading horizon Energisa SA is expected to under-perform the Btsp II. In addition to that, Energisa is 2.19 times more volatile than Btsp II Fundo. It trades about -0.08 of its total potential returns per unit of risk. Btsp II Fundo is currently generating about 0.1 per unit of volatility. If you would invest  9,988  in Btsp II Fundo on October 9, 2024 and sell it today you would earn a total of  1,172  from holding Btsp II Fundo or generate 11.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.39%
Values	Daily Returns

Energisa SA  vs.  Btsp II Fundo

Energisa SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Energisa SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's technical and fundamental indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Btsp II Fundo

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Btsp II Fundo are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat strong basic indicators, Btsp II is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Energisa and Btsp II

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

The idea behind Energisa SA and Btsp II Fundo 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 Stocks Directory module to find actively traded stocks across global markets.