Correlation Between Energisa and NAVI CRDITO

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

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

Diversification Opportunities for Energisa and NAVI CRDITO

-0.04

Correlation Coefficient

Energisa  NAVI CRDITO

Good diversification

The 3 months correlation between Energisa and NAVI is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Energisa SA and NAVI CRDITO IMOBILIRIO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NAVI CRDITO IMOBILIRIO 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 NAVI CRDITO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NAVI CRDITO IMOBILIRIO has no effect on the direction of Energisa i.e., Energisa and NAVI CRDITO go up and down completely randomly.

Pair Corralation between Energisa and NAVI CRDITO

Assuming the 90 days trading horizon Energisa SA is expected to generate 0.7 times more return on investment than NAVI CRDITO. However, Energisa SA is 1.42 times less risky than NAVI CRDITO. It trades about 0.02 of its potential returns per unit of risk. NAVI CRDITO IMOBILIRIO is currently generating about -0.02 per unit of risk. If you would invest  4,021  in Energisa SA on November 29, 2024 and sell it today you would earn a total of  30.00  from holding Energisa SA or generate 0.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

Energisa SA  vs.  NAVI CRDITO IMOBILIRIO

Energisa SA

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Energisa SA are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong technical and fundamental indicators, Energisa is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

NAVI CRDITO IMOBILIRIO

Risk-Adjusted Performance

Very Weak

Over the last 90 days NAVI CRDITO IMOBILIRIO has generated negative risk-adjusted returns adding no value to fund investors. Despite somewhat strong basic indicators, NAVI CRDITO 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 NAVI CRDITO

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

The idea behind Energisa SA and NAVI CRDITO IMOBILIRIO 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.