Correlation Between Equatorial Energia and Hypera SA

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

By analyzing existing cross correlation between Equatorial Energia SA and Hypera SA, you can compare the effects of market volatilities on Equatorial Energia and Hypera SA 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 Equatorial Energia with a short position of Hypera SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Equatorial Energia and Hypera SA.

Diversification Opportunities for Equatorial Energia and Hypera SA

0.82

Correlation Coefficient

Equatorial Energia  Hypera SA

Very poor diversification

The 3 months correlation between Equatorial and Hypera is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Equatorial Energia SA and Hypera SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hypera SA and Equatorial Energia 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 Equatorial Energia SA are associated (or correlated) with Hypera SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hypera SA has no effect on the direction of Equatorial Energia i.e., Equatorial Energia and Hypera SA go up and down completely randomly.

Pair Corralation between Equatorial Energia and Hypera SA

Assuming the 90 days horizon Equatorial Energia SA is expected to under-perform the Hypera SA. But the pink sheet apears to be less risky and, when comparing its historical volatility, Equatorial Energia SA is 1.13 times less risky than Hypera SA. The pink sheet trades about -0.07 of its potential returns per unit of risk. The Hypera SA is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  309.00  in Hypera SA on October 8, 2024 and sell it today you would lose (1.00) from holding Hypera SA or give up 0.32% of portfolio value over 90 days.

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

Equatorial Energia SA  vs.  Hypera SA

Equatorial Energia

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Equatorial Energia SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain fairly 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.

Hypera SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hypera SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's primary indicators remain fairly 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.

Pair Trading with Equatorial Energia and Hypera SA

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

The idea behind Equatorial Energia SA and Hypera 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.