Correlation Between Energisa Mato and Alfa Holdings

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

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

Diversification Opportunities for Energisa Mato and Alfa Holdings

-0.62

Correlation Coefficient

Energisa Mato  Alfa Holdings

Excellent diversification

The 3 months correlation between Energisa and Alfa is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Energisa Mato Grosso and Alfa Holdings SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alfa Holdings SA and Energisa Mato 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 Mato Grosso are associated (or correlated) with Alfa Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alfa Holdings SA has no effect on the direction of Energisa Mato i.e., Energisa Mato and Alfa Holdings go up and down completely randomly.

Pair Corralation between Energisa Mato and Alfa Holdings

Assuming the 90 days trading horizon Energisa Mato Grosso is expected to generate 0.32 times more return on investment than Alfa Holdings. However, Energisa Mato Grosso is 3.12 times less risky than Alfa Holdings. It trades about 0.14 of its potential returns per unit of risk. Alfa Holdings SA is currently generating about -0.15 per unit of risk. If you would invest  7,757  in Energisa Mato Grosso on September 12, 2024 and sell it today you would earn a total of  733.00  from holding Energisa Mato Grosso or generate 9.45% return on investment over 90 days.

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

Energisa Mato Grosso  vs.  Alfa Holdings SA

Energisa Mato Grosso

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Energisa Mato Grosso are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Energisa Mato may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Alfa Holdings SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alfa Holdings 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 Preferred 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 Energisa Mato and Alfa Holdings

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

The idea behind Energisa Mato Grosso and Alfa Holdings 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.

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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.