Correlation Between Hypera SA and Equatorial Energia

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

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

Diversification Opportunities for Hypera SA and Equatorial Energia

0.82

Correlation Coefficient

Hypera SA  Equatorial Energia

Very poor diversification

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

Pair Corralation between Hypera SA and Equatorial Energia

Assuming the 90 days horizon Hypera SA is expected to under-perform the Equatorial Energia. But the pink sheet apears to be less risky and, when comparing its historical volatility, Hypera SA is 1.19 times less risky than Equatorial Energia. The pink sheet trades about -0.06 of its potential returns per unit of risk. The Equatorial Energia SA is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  450.00  in Equatorial Energia SA on October 8, 2024 and sell it today you would earn a total of  10.00  from holding Equatorial Energia SA or generate 2.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	74.8%
Values	Daily Returns

Hypera SA  vs.  Equatorial Energia SA

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.

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.

Pair Trading with Hypera SA and Equatorial Energia

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

The idea behind Hypera SA and Equatorial Energia 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.