Correlation Between Afluente Transmisso and Centrais Eltricas
Can any of the company-specific risk be diversified away by investing in both Afluente Transmisso and Centrais Eltricas 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 Afluente Transmisso and Centrais Eltricas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Afluente Transmisso de and Centrais Eltricas Brasileiras, you can compare the effects of market volatilities on Afluente Transmisso and Centrais Eltricas 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 Afluente Transmisso with a short position of Centrais Eltricas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Afluente Transmisso and Centrais Eltricas.
Diversification Opportunities for Afluente Transmisso and Centrais Eltricas
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Afluente and Centrais is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Afluente Transmisso de and Centrais Eltricas Brasileiras in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centrais Eltricas and Afluente Transmisso 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 Afluente Transmisso de are associated (or correlated) with Centrais Eltricas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Centrais Eltricas has no effect on the direction of Afluente Transmisso i.e., Afluente Transmisso and Centrais Eltricas go up and down completely randomly.
Pair Corralation between Afluente Transmisso and Centrais Eltricas
Assuming the 90 days trading horizon Afluente Transmisso de is expected to generate 1.8 times more return on investment than Centrais Eltricas. However, Afluente Transmisso is 1.8 times more volatile than Centrais Eltricas Brasileiras. It trades about -0.09 of its potential returns per unit of risk. Centrais Eltricas Brasileiras is currently generating about -0.27 per unit of risk. If you would invest 771.00 in Afluente Transmisso de on January 25, 2024 and sell it today you would lose (73.00) from holding Afluente Transmisso de or give up 9.47% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Afluente Transmisso de vs. Centrais Eltricas Brasileiras
Performance |
| Timeline |
| Afluente Transmisso |
| Centrais Eltricas |
Afluente Transmisso and Centrais Eltricas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Afluente Transmisso and Centrais Eltricas
The main advantage of trading using opposite Afluente Transmisso and Centrais Eltricas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Afluente Transmisso position performs unexpectedly, Centrais Eltricas 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 Centrais Eltricas will offset losses from the drop in Centrais Eltricas' long position.| Afluente Transmisso vs. Companhia de Saneamento | Afluente Transmisso vs. BB Seguridade Participacoes | Afluente Transmisso vs. Hypera SA |
| Centrais Eltricas vs. Centrais Eltricas Brasileiras | Centrais Eltricas vs. Energisa SA | Centrais Eltricas vs. Energisa Mato Grosso | Centrais Eltricas vs. CTEEP Companhia |
Check out your portfolio center.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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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