Correlation Between Semapa and EDP Energias
Can any of the company-specific risk be diversified away by investing in both Semapa and EDP Energias 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 Semapa and EDP Energias into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Semapa and EDP Energias, you can compare the effects of market volatilities on Semapa and EDP Energias 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 Semapa with a short position of EDP Energias. Check out your portfolio center. Please also check ongoing floating volatility patterns of Semapa and EDP Energias.
Diversification Opportunities for Semapa and EDP Energias
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Semapa and EDP is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Semapa and EDP Energias in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EDP Energias and Semapa 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 Semapa are associated (or correlated) with EDP Energias. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EDP Energias has no effect on the direction of Semapa i.e., Semapa and EDP Energias go up and down completely randomly.
Pair Corralation between Semapa and EDP Energias
Assuming the 90 days trading horizon Semapa is expected to generate 0.8 times more return on investment than EDP Energias. However, Semapa is 1.24 times less risky than EDP Energias. It trades about 0.06 of its potential returns per unit of risk. EDP Energias is currently generating about -0.07 per unit of risk. If you would invest 1,316 in Semapa on January 19, 2024 and sell it today you would earn a total of 200.00 from holding Semapa or generate 15.2% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Semapa vs. EDP Energias
Performance |
Timeline |
Semapa |
EDP Energias |
Semapa and EDP Energias Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Semapa and EDP Energias
The main advantage of trading using opposite Semapa and EDP Energias positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Semapa position performs unexpectedly, EDP Energias 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 EDP Energias will offset losses from the drop in EDP Energias' long position.Semapa vs. Altri SGPS SA | Semapa vs. The Navigator | Semapa vs. Sonae SGPS SA | Semapa vs. Mota Engil SGPS SA |
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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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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