Correlation Between Energisa and Transocean
Can any of the company-specific risk be diversified away by investing in both Energisa and Transocean 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 Transocean into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Energisa SA and Transocean, you can compare the effects of market volatilities on Energisa and Transocean 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 Transocean. Check out your portfolio center. Please also check ongoing floating volatility patterns of Energisa and Transocean.
Diversification Opportunities for Energisa and Transocean
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Energisa and Transocean is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Energisa SA and Transocean in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transocean 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 Transocean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transocean has no effect on the direction of Energisa i.e., Energisa and Transocean go up and down completely randomly.
Pair Corralation between Energisa and Transocean
Assuming the 90 days trading horizon Energisa SA is expected to under-perform the Transocean. But the stock apears to be less risky and, when comparing its historical volatility, Energisa SA is 2.01 times less risky than Transocean. The stock trades about -0.15 of its potential returns per unit of risk. The Transocean is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 2,418 in Transocean on October 20, 2024 and sell it today you would earn a total of 22.00 from holding Transocean or generate 0.91% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 98.33% |
Values | Daily Returns |
Energisa SA vs. Transocean
Performance |
Timeline |
Energisa SA |
Transocean |
Energisa and Transocean Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Energisa and Transocean
The main advantage of trading using opposite Energisa and Transocean positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Energisa position performs unexpectedly, Transocean 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 Transocean will offset losses from the drop in Transocean's long position.Energisa vs. Equatorial Energia SA | Energisa vs. CPFL Energia SA | Energisa vs. Eneva SA | Energisa vs. Companhia de Saneamento |
Transocean vs. HDFC Bank Limited | Transocean vs. Healthcare Realty Trust | Transocean vs. Petrleo Brasileiro SA | Transocean vs. Apple Inc |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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