Correlation Between Energisa and Hsi Logistica

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

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

Diversification Opportunities for Energisa and Hsi Logistica

-0.27

Correlation Coefficient

Energisa  Hsi Logistica

Very good diversification

The 3 months correlation between Energisa and Hsi is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Energisa SA and Hsi Logistica Fundo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hsi Logistica 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 Hsi Logistica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hsi Logistica Fundo has no effect on the direction of Energisa i.e., Energisa and Hsi Logistica go up and down completely randomly.

Pair Corralation between Energisa and Hsi Logistica

Assuming the 90 days trading horizon Energisa SA is expected to generate 1.64 times more return on investment than Hsi Logistica. However, Energisa is 1.64 times more volatile than Hsi Logistica Fundo. It trades about 0.11 of its potential returns per unit of risk. Hsi Logistica Fundo is currently generating about 0.11 per unit of risk. If you would invest  3,724  in Energisa SA on December 23, 2024 and sell it today you would earn a total of  441.00  from holding Energisa SA or generate 11.84% return on investment over 90 days.

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

Energisa SA  vs.  Hsi Logistica Fundo

Energisa SA

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Energisa SA are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain technical and fundamental indicators, Energisa sustained solid returns over the last few months and may actually be approaching a breakup point.

Hsi Logistica Fundo

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hsi Logistica Fundo are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat weak essential indicators, Hsi Logistica may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Energisa and Hsi Logistica

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

The idea behind Energisa SA and Hsi Logistica 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.

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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.