Correlation Between Energisa and HEDGE Brasil

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

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

Diversification Opportunities for Energisa and HEDGE Brasil

0.0

Correlation Coefficient

Energisa  HEDGE Brasil

Pay attention - limited upside

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

Pair Corralation between Energisa and HEDGE Brasil

If you would invest  18,495  in HEDGE Brasil Shopping on October 4, 2024 and sell it today you would earn a total of  310.00  from holding HEDGE Brasil Shopping or generate 1.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	5.26%
Values	Daily Returns

Energisa SA  vs.  HEDGE Brasil Shopping

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 somewhat strong technical and fundamental indicators, Energisa is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

HEDGE Brasil Shopping

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HEDGE Brasil Shopping has generated negative risk-adjusted returns adding no value to fund investors. Despite somewhat strong fundamental drivers, HEDGE Brasil 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 HEDGE Brasil

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

The idea behind Energisa SA and HEDGE Brasil Shopping 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.