Correlation Between Energisa and Unipar Carbocloro

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

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

Diversification Opportunities for Energisa and Unipar Carbocloro

0.67

Correlation Coefficient

Energisa  Unipar Carbocloro

Poor diversification

The 3 months correlation between Energisa and Unipar is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Energisa SA and Unipar Carbocloro SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unipar Carbocloro 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 Unipar Carbocloro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Unipar Carbocloro has no effect on the direction of Energisa i.e., Energisa and Unipar Carbocloro go up and down completely randomly.

Pair Corralation between Energisa and Unipar Carbocloro

Assuming the 90 days trading horizon Energisa is expected to generate 1.29 times less return on investment than Unipar Carbocloro. But when comparing it to its historical volatility, Energisa SA is 1.09 times less risky than Unipar Carbocloro. It trades about 0.1 of its potential returns per unit of risk. Unipar Carbocloro SA is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  4,376  in Unipar Carbocloro SA on December 25, 2024 and sell it today you would earn a total of  625.00  from holding Unipar Carbocloro SA or generate 14.28% return on investment over 90 days.

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

Energisa SA  vs.  Unipar Carbocloro SA

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.

Unipar Carbocloro

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Unipar Carbocloro SA are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Unipar Carbocloro unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Energisa and Unipar Carbocloro

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

The idea behind Energisa SA and Unipar Carbocloro 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.

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.