Correlation Between Tecnisa SA and Engie Brasil

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

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

Diversification Opportunities for Tecnisa SA and Engie Brasil

0.0

Correlation Coefficient

Tecnisa SA  Engie Brasil

Pay attention - limited upside

The 3 months correlation between Tecnisa and Engie is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Tecnisa SA and Engie Brasil Energia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Engie Brasil Energia and Tecnisa 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 Tecnisa SA are associated (or correlated) with Engie Brasil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Engie Brasil Energia has no effect on the direction of Tecnisa SA i.e., Tecnisa SA and Engie Brasil go up and down completely randomly.

Pair Corralation between Tecnisa SA and Engie Brasil

Assuming the 90 days trading horizon Tecnisa SA is expected to generate 2.82 times more return on investment than Engie Brasil. However, Tecnisa SA is 2.82 times more volatile than Engie Brasil Energia. It trades about 0.03 of its potential returns per unit of risk. Engie Brasil Energia is currently generating about -0.01 per unit of risk. If you would invest  137.00  in Tecnisa SA on November 29, 2024 and sell it today you would earn a total of  4.00  from holding Tecnisa SA or generate 2.92% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Tecnisa SA  vs.  Engie Brasil Energia

Tecnisa SA

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Tecnisa SA are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Tecnisa SA may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Engie Brasil Energia

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Tecnisa SA and Engie Brasil

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

The idea behind Tecnisa SA and Engie Brasil Energia 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.