Correlation Between Energisa and KILIMA VOLKANO

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

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

Diversification Opportunities for Energisa and KILIMA VOLKANO

0.26

Correlation Coefficient

Energisa  KILIMA VOLKANO

Modest diversification

The 3 months correlation between Energisa and KILIMA is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Energisa SA and KILIMA VOLKANO RECEBVEIS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KILIMA VOLKANO RECEBVEIS 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 KILIMA VOLKANO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KILIMA VOLKANO RECEBVEIS has no effect on the direction of Energisa i.e., Energisa and KILIMA VOLKANO go up and down completely randomly.

Pair Corralation between Energisa and KILIMA VOLKANO

Assuming the 90 days trading horizon Energisa is expected to generate 2.07 times less return on investment than KILIMA VOLKANO. In addition to that, Energisa is 1.14 times more volatile than KILIMA VOLKANO RECEBVEIS. It trades about 0.09 of its total potential returns per unit of risk. KILIMA VOLKANO RECEBVEIS is currently generating about 0.22 per unit of volatility. If you would invest  5,572  in KILIMA VOLKANO RECEBVEIS on December 24, 2024 and sell it today you would earn a total of  1,353  from holding KILIMA VOLKANO RECEBVEIS or generate 24.28% return on investment over 90 days.

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

Energisa SA  vs.  KILIMA VOLKANO RECEBVEIS

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.

KILIMA VOLKANO RECEBVEIS

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in KILIMA VOLKANO RECEBVEIS are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat weak basic indicators, KILIMA VOLKANO sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Energisa and KILIMA VOLKANO

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

The idea behind Energisa SA and KILIMA VOLKANO RECEBVEIS 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.