Correlation Between Energisa and Energisa Mato

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

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

Diversification Opportunities for Energisa and Energisa Mato

0.69

Correlation Coefficient

Energisa  Energisa Mato

Poor diversification

The 3 months correlation between Energisa and Energisa is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Energisa SA and Energisa Mato Grosso in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Energisa Mato Grosso and Energisa 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 Energisa SA are associated (or correlated) with Energisa Mato. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Energisa Mato Grosso has no effect on the direction of Energisa i.e., Energisa and Energisa Mato go up and down completely randomly.

Pair Corralation between Energisa and Energisa Mato

Assuming the 90 days trading horizon Energisa SA is expected to under-perform the Energisa Mato. But the stock apears to be less risky and, when comparing its historical volatility, Energisa SA is 1.14 times less risky than Energisa Mato. The stock trades about -0.2 of its potential returns per unit of risk. The Energisa Mato Grosso is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest  8,500  in Energisa Mato Grosso on September 14, 2024 and sell it today you would lose (1,074) from holding Energisa Mato Grosso or give up 12.64% of portfolio value over 90 days.

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

Energisa SA  vs.  Energisa Mato Grosso

Energisa SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Energisa 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.

Energisa Mato Grosso

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Energisa Mato Grosso has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Energisa and Energisa Mato

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

The idea behind Energisa SA and Energisa Mato Grosso 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.