Correlation Between Greenvolt Energias and NOS SGPS

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

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

Diversification Opportunities for Greenvolt Energias and NOS SGPS

0.72

Correlation Coefficient

Greenvolt Energias  NOS SGPS

Poor diversification

The 3 months correlation between Greenvolt and NOS is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Greenvolt Energias Renovaveis and NOS SGPS SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NOS SGPS SA and Greenvolt Energias 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 Greenvolt Energias Renovaveis are associated (or correlated) with NOS SGPS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NOS SGPS SA has no effect on the direction of Greenvolt Energias i.e., Greenvolt Energias and NOS SGPS go up and down completely randomly.

Pair Corralation between Greenvolt Energias and NOS SGPS

Assuming the 90 days trading horizon Greenvolt Energias Renovaveis is expected to generate 0.29 times more return on investment than NOS SGPS. However, Greenvolt Energias Renovaveis is 3.48 times less risky than NOS SGPS. It trades about 0.38 of its potential returns per unit of risk. NOS SGPS SA is currently generating about -0.05 per unit of risk. If you would invest  801.00  in Greenvolt Energias Renovaveis on September 1, 2024 and sell it today you would earn a total of  21.00  from holding Greenvolt Energias Renovaveis or generate 2.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	81.82%
Values	Daily Returns

Greenvolt Energias Renovaveis  vs.  NOS SGPS SA

Greenvolt Energias

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Greenvolt Energias Renovaveis has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent essential indicators, Greenvolt Energias is not utilizing all of its potentials. The newest stock price mess, may contribute to short-term losses for the institutional investors.

NOS SGPS SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NOS SGPS SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, NOS SGPS is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Greenvolt Energias and NOS SGPS

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

The idea behind Greenvolt Energias Renovaveis and NOS SGPS 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.