Correlation Between Energisa and FDO INV

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

By analyzing existing cross correlation between Energisa SA and FDO INV IMOB, you can compare the effects of market volatilities on Energisa and FDO INV 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 FDO INV. Check out your portfolio center. Please also check ongoing floating volatility patterns of Energisa and FDO INV.

Diversification Opportunities for Energisa and FDO INV

0.71

Correlation Coefficient

Energisa  FDO INV

Poor diversification

The 3 months correlation between Energisa and FDO is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Energisa SA and FDO INV IMOB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FDO INV IMOB 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 FDO INV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FDO INV IMOB has no effect on the direction of Energisa i.e., Energisa and FDO INV go up and down completely randomly.

Pair Corralation between Energisa and FDO INV

Assuming the 90 days trading horizon Energisa SA is expected to generate 14.9 times more return on investment than FDO INV. However, Energisa is 14.9 times more volatile than FDO INV IMOB. It trades about 0.1 of its potential returns per unit of risk. FDO INV IMOB is currently generating about 0.26 per unit of risk. If you would invest  3,719  in Energisa SA on December 26, 2024 and sell it today you would earn a total of  401.00  from holding Energisa SA or generate 10.78% return on investment over 90 days.

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

Energisa SA  vs.  FDO INV IMOB

Energisa SA

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Energisa SA are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain technical and fundamental indicators, Energisa may actually be approaching a critical reversion point that can send shares even higher in April 2025.

FDO INV IMOB

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in FDO INV IMOB are ranked lower than 20 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat strong basic indicators, FDO INV 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 FDO INV

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

The idea behind Energisa SA and FDO INV IMOB 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.