Correlation Between Engie Brasil and EZTEC Empreendimentos

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

By analyzing existing cross correlation between Engie Brasil Energia and EZTEC Empreendimentos e, you can compare the effects of market volatilities on Engie Brasil and EZTEC Empreendimentos 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 Engie Brasil with a short position of EZTEC Empreendimentos. Check out your portfolio center. Please also check ongoing floating volatility patterns of Engie Brasil and EZTEC Empreendimentos.

Diversification Opportunities for Engie Brasil and EZTEC Empreendimentos

0.23

Correlation Coefficient

Engie Brasil  EZTEC Empreendimentos

Modest diversification

The 3 months correlation between Engie and EZTEC is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Engie Brasil Energia and EZTEC Empreendimentos e in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EZTEC Empreendimentos and Engie Brasil 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 Engie Brasil Energia are associated (or correlated) with EZTEC Empreendimentos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EZTEC Empreendimentos has no effect on the direction of Engie Brasil i.e., Engie Brasil and EZTEC Empreendimentos go up and down completely randomly.

Pair Corralation between Engie Brasil and EZTEC Empreendimentos

Assuming the 90 days trading horizon Engie Brasil Energia is expected to generate 0.39 times more return on investment than EZTEC Empreendimentos. However, Engie Brasil Energia is 2.58 times less risky than EZTEC Empreendimentos. It trades about -0.26 of its potential returns per unit of risk. EZTEC Empreendimentos e is currently generating about -0.11 per unit of risk. If you would invest  4,427  in Engie Brasil Energia on September 16, 2024 and sell it today you would lose (720.00) from holding Engie Brasil Energia or give up 16.26% of portfolio value over 90 days.

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

Engie Brasil Energia  vs.  EZTEC Empreendimentos e

Engie Brasil Energia

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Engie Brasil Energia 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.

EZTEC Empreendimentos

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EZTEC Empreendimentos e 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.

Pair Trading with Engie Brasil and EZTEC Empreendimentos

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

The idea behind Engie Brasil Energia and EZTEC Empreendimentos e 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.