Correlation Between Spire and Companhia Paranaense

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

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

Diversification Opportunities for Spire and Companhia Paranaense

-0.41

Correlation Coefficient

Spire  Companhia Paranaense

Very good diversification

The 3 months correlation between Spire and Companhia is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Spire Inc and Companhia Paranaense de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Companhia Paranaense and Spire 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 Spire Inc are associated (or correlated) with Companhia Paranaense. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Companhia Paranaense has no effect on the direction of Spire i.e., Spire and Companhia Paranaense go up and down completely randomly.

Pair Corralation between Spire and Companhia Paranaense

Allowing for the 90-day total investment horizon Spire is expected to generate 2.29 times less return on investment than Companhia Paranaense. But when comparing it to its historical volatility, Spire Inc is 1.49 times less risky than Companhia Paranaense. It trades about 0.02 of its potential returns per unit of risk. Companhia Paranaense de is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  498.00  in Companhia Paranaense de on October 5, 2024 and sell it today you would earn a total of  83.00  from holding Companhia Paranaense de or generate 16.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Spire Inc  vs.  Companhia Paranaense de

Spire Inc

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Spire Inc are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating basic indicators, Spire may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Companhia Paranaense

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Companhia Paranaense de has generated negative risk-adjusted returns adding no value to investors with long positions. Even with conflicting performance in the last few months, the Stock's essential indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Spire and Companhia Paranaense

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

The idea behind Spire Inc and Companhia Paranaense 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.

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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.