Correlation Between EON SE and Companhia Energetica

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

By analyzing existing cross correlation between EON SE ADR and Companhia Energetica de, you can compare the effects of market volatilities on EON SE and Companhia Energetica 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 EON SE with a short position of Companhia Energetica. Check out your portfolio center. Please also check ongoing floating volatility patterns of EON SE and Companhia Energetica.

Diversification Opportunities for EON SE and Companhia Energetica

0.0

Correlation Coefficient

EON SE  Companhia Energetica

Pay attention - limited upside

The 3 months correlation between EON and Companhia is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding EON SE ADR and Companhia Energetica de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Companhia Energetica and EON SE 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 EON SE ADR are associated (or correlated) with Companhia Energetica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Companhia Energetica has no effect on the direction of EON SE i.e., EON SE and Companhia Energetica go up and down completely randomly.

Pair Corralation between EON SE and Companhia Energetica

If you would invest  179.00  in Companhia Energetica de on December 29, 2024 and sell it today you would earn a total of  2.00  from holding Companhia Energetica de or generate 1.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

EON SE ADR  vs.  Companhia Energetica de

EON SE ADR

Risk-Adjusted Performance

Very Weak

Over the last 90 days EON SE ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical and fundamental indicators, EON SE is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Companhia Energetica

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Companhia Energetica de are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable forward indicators, Companhia Energetica is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with EON SE and Companhia Energetica

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

The idea behind EON SE ADR and Companhia Energetica de 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.