Correlation Between OSX Brasil and Energisa

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

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

Diversification Opportunities for OSX Brasil and Energisa

0.8

Correlation Coefficient

OSX Brasil  Energisa

Very poor diversification

The 3 months correlation between OSX and Energisa is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding OSX Brasil SA and Energisa SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Energisa SA and OSX Brasil 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 OSX Brasil SA are associated (or correlated) with Energisa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Energisa SA has no effect on the direction of OSX Brasil i.e., OSX Brasil and Energisa go up and down completely randomly.

Pair Corralation between OSX Brasil and Energisa

Assuming the 90 days trading horizon OSX Brasil SA is expected to generate 2.36 times more return on investment than Energisa. However, OSX Brasil is 2.36 times more volatile than Energisa SA. It trades about 0.14 of its potential returns per unit of risk. Energisa SA is currently generating about -0.09 per unit of risk. If you would invest  340.00  in OSX Brasil SA on October 20, 2024 and sell it today you would earn a total of  35.00  from holding OSX Brasil SA or generate 10.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	94.74%
Values	Daily Returns

OSX Brasil SA  vs.  Energisa SA

OSX Brasil SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days OSX Brasil 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 basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Energisa SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Energisa SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's technical and fundamental indicators remain somewhat 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 OSX Brasil and Energisa

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

The idea behind OSX Brasil SA and Energisa 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.