Correlation Between B3 SA and Eneva SA

Can any of the company-specific risk be diversified away by investing in both B3 SA and Eneva SA 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 B3 SA and Eneva SA into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between B3 SA and Eneva SA, you can compare the effects of market volatilities on B3 SA and Eneva SA 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 B3 SA with a short position of Eneva SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of B3 SA and Eneva SA.

Diversification Opportunities for B3 SA and Eneva SA

0.58

Correlation Coefficient

B3 SA  Eneva SA

Very weak diversification

The 3 months correlation between B3SA3 and Eneva is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding B3 SA and Eneva SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eneva SA and B3 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 B3 SA are associated (or correlated) with Eneva SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eneva SA has no effect on the direction of B3 SA i.e., B3 SA and Eneva SA go up and down completely randomly.

Pair Corralation between B3 SA and Eneva SA

Assuming the 90 days trading horizon B3 SA is expected to under-perform the Eneva SA. In addition to that, B3 SA is 1.48 times more volatile than Eneva SA. It trades about -0.22 of its total potential returns per unit of risk. Eneva SA is currently generating about -0.19 per unit of volatility. If you would invest  1,350  in Eneva SA on September 3, 2024 and sell it today you would lose (195.00) from holding Eneva SA or give up 14.44% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

B3 SA   vs.  Eneva SA

B3 SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days B3 SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Eneva SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eneva SA 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 Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with B3 SA and Eneva SA

The main advantage of trading using opposite B3 SA and Eneva SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if B3 SA position performs unexpectedly, Eneva SA 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 Eneva SA will offset losses from the drop in Eneva SA's long position.

The idea behind B3 SA and Eneva 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.

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 Money Managers module to screen money managers from public funds and ETFs managed around the world.