Correlation Between Vinci Logistica and Energisa

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

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

Diversification Opportunities for Vinci Logistica and Energisa

0.59

Correlation Coefficient

Vinci Logistica  Energisa

Very weak diversification

The 3 months correlation between Vinci and Energisa is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Vinci Logistica Fundo and Energisa SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Energisa SA and Vinci Logistica 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 Vinci Logistica Fundo 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 Vinci Logistica i.e., Vinci Logistica and Energisa go up and down completely randomly.

Pair Corralation between Vinci Logistica and Energisa

Assuming the 90 days trading horizon Vinci Logistica Fundo is expected to generate 0.85 times more return on investment than Energisa. However, Vinci Logistica Fundo is 1.18 times less risky than Energisa. It trades about 0.04 of its potential returns per unit of risk. Energisa SA is currently generating about 0.02 per unit of risk. If you would invest  7,590  in Vinci Logistica Fundo on November 29, 2024 and sell it today you would earn a total of  240.00  from holding Vinci Logistica Fundo or generate 3.16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.33%
Values	Daily Returns

Vinci Logistica Fundo  vs.  Energisa SA

Vinci Logistica Fundo

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Vinci Logistica Fundo are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong essential indicators, Vinci Logistica is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Energisa SA

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Energisa SA are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong technical and fundamental indicators, Energisa is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Vinci Logistica and Energisa

The main advantage of trading using opposite Vinci Logistica and Energisa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vinci Logistica 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 Vinci Logistica Fundo 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.