Correlation Between Energisa and Multilaser Industrial

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

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

Diversification Opportunities for Energisa and Multilaser Industrial

0.59

Correlation Coefficient

Energisa  Multilaser Industrial

Very weak diversification

The 3 months correlation between Energisa and Multilaser is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Energisa SA and Multilaser Industrial SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Multilaser Industrial 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 Multilaser Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Multilaser Industrial has no effect on the direction of Energisa i.e., Energisa and Multilaser Industrial go up and down completely randomly.

Pair Corralation between Energisa and Multilaser Industrial

Assuming the 90 days trading horizon Energisa SA is expected to generate 0.42 times more return on investment than Multilaser Industrial. However, Energisa SA is 2.37 times less risky than Multilaser Industrial. It trades about -0.14 of its potential returns per unit of risk. Multilaser Industrial SA is currently generating about -0.13 per unit of risk. If you would invest  4,790  in Energisa SA on October 7, 2024 and sell it today you would lose (1,230) from holding Energisa SA or give up 25.68% of portfolio value over 90 days.

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

Energisa SA  vs.  Multilaser Industrial SA

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.

Multilaser Industrial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Multilaser Industrial SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Energisa and Multilaser Industrial

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

The idea behind Energisa SA and Multilaser Industrial SA 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.