Correlation Between Lojas Renner and Eneva SA

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

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

Diversification Opportunities for Lojas Renner and Eneva SA

0.89

Correlation Coefficient

Lojas Renner  Eneva SA

Very poor diversification

The 3 months correlation between Lojas and Eneva is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Lojas Renner SA and Eneva SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eneva SA and Lojas Renner 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 Lojas Renner SA are associated (or correlated) with Eneva SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eneva SA has no effect on the direction of Lojas Renner i.e., Lojas Renner and Eneva SA go up and down completely randomly.

Pair Corralation between Lojas Renner and Eneva SA

Assuming the 90 days trading horizon Lojas Renner SA is expected to generate 1.87 times more return on investment than Eneva SA. However, Lojas Renner is 1.87 times more volatile than Eneva SA. It trades about -0.13 of its potential returns per unit of risk. Eneva SA is currently generating about -0.27 per unit of risk. If you would invest  1,620  in Lojas Renner SA on September 28, 2024 and sell it today you would lose (362.00) from holding Lojas Renner SA or give up 22.35% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.36%
Values	Daily Returns

Lojas Renner SA  vs.  Eneva SA

Lojas Renner SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lojas Renner 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.

Eneva SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eneva 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.

Pair Trading with Lojas Renner and Eneva SA

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

The idea behind Lojas Renner SA and Eneva 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.