Correlation Between Companhia Energetica and Aberdeen Standard

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

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

Diversification Opportunities for Companhia Energetica and Aberdeen Standard

-0.34

Correlation Coefficient

Companhia Energetica  Aberdeen Standard

Very good diversification

The 3 months correlation between Companhia and Aberdeen is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Companhia Energetica de and Aberdeen Standard Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aberdeen Standard Global and Companhia Energetica 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 Energetica de are associated (or correlated) with Aberdeen Standard. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aberdeen Standard Global has no effect on the direction of Companhia Energetica i.e., Companhia Energetica and Aberdeen Standard go up and down completely randomly.

Pair Corralation between Companhia Energetica and Aberdeen Standard

Considering the 90-day investment horizon Companhia Energetica de is expected to generate 2.63 times more return on investment than Aberdeen Standard. However, Companhia Energetica is 2.63 times more volatile than Aberdeen Standard Global. It trades about 0.06 of its potential returns per unit of risk. Aberdeen Standard Global is currently generating about -0.01 per unit of risk. If you would invest  195.00  in Companhia Energetica de on August 31, 2024 and sell it today you would earn a total of  5.00  from holding Companhia Energetica de or generate 2.56% return on investment over 90 days.

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

Companhia Energetica de  vs.  Aberdeen Standard Global

Companhia Energetica

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Companhia Energetica de has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable forward indicators, Companhia Energetica is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Aberdeen Standard Global

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Aberdeen Standard Global are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. Despite fairly strong technical and fundamental indicators, Aberdeen Standard is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Companhia Energetica and Aberdeen Standard

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

The idea behind Companhia Energetica de and Aberdeen Standard Global 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.