Correlation Between Centrais Eltricas and Pacific Gas

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

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

Diversification Opportunities for Centrais Eltricas and Pacific Gas

0.0

Correlation Coefficient

Centrais Eltricas  Pacific Gas

Pay attention - limited upside

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

Pair Corralation between Centrais Eltricas and Pacific Gas

Assuming the 90 days horizon Centrais Eltricas Brasileiras is expected to under-perform the Pacific Gas. In addition to that, Centrais Eltricas is 1.47 times more volatile than Pacific Gas and. It trades about -0.17 of its total potential returns per unit of risk. Pacific Gas and is currently generating about -0.03 per unit of volatility. If you would invest  2,197  in Pacific Gas and on September 16, 2024 and sell it today you would lose (71.00) from holding Pacific Gas and or give up 3.23% of portfolio value over 90 days.

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

Centrais Eltricas Brasileiras  vs.  Pacific Gas and

Centrais Eltricas

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Centrais Eltricas Brasileiras has generated negative risk-adjusted returns adding no value to investors with long positions. Despite abnormal performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pacific Gas

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pacific Gas and has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical and fundamental indicators, Pacific Gas is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Centrais Eltricas and Pacific Gas

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

The idea behind Centrais Eltricas Brasileiras and Pacific Gas and 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 Transaction History module to view history of all your transactions and understand their impact on performance.