Correlation Between Companhia Energtica and Banco ABC

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

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

Diversification Opportunities for Companhia Energtica and Banco ABC

0.0

Correlation Coefficient

Companhia Energtica  Banco ABC

Pay attention - limited upside

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

Pair Corralation between Companhia Energtica and Banco ABC

If you would invest (100.00) in Companhia Energtica de on March 13, 2024 and sell it today you would earn a total of  100.00  from holding Companhia Energtica de or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Companhia Energtica de  vs.  Banco ABC Brasil

Companhia Energtica

Risk-Adjusted Performance

0 of 100

Insignificant

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

Banco ABC Brasil

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Banco ABC Brasil 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 Preferred Stock's basic indicators remain comparatively stable which may send shares a bit higher in July 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Companhia Energtica and Banco ABC

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

The idea behind Companhia Energtica de and Banco ABC Brasil 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.

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 Global Correlations module to find global opportunities by holding instruments from different markets.