Correlation Between Performa Real and Energisa

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

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

Diversification Opportunities for Performa Real and Energisa

-0.14

Correlation Coefficient

Performa Real  Energisa

Good diversification

The 3 months correlation between Performa and Energisa is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Performa Real Estate and Energisa SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Energisa SA and Performa Real 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 Performa Real Estate are associated (or correlated) with Energisa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Energisa SA has no effect on the direction of Performa Real i.e., Performa Real and Energisa go up and down completely randomly.

Pair Corralation between Performa Real and Energisa

Assuming the 90 days trading horizon Performa Real Estate is expected to generate 3.93 times more return on investment than Energisa. However, Performa Real is 3.93 times more volatile than Energisa SA. It trades about 0.03 of its potential returns per unit of risk. Energisa SA is currently generating about -0.23 per unit of risk. If you would invest  3,000  in Performa Real Estate on September 5, 2024 and sell it today you would earn a total of  0.00  from holding Performa Real Estate or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	93.65%
Values	Daily Returns

Performa Real Estate  vs.  Energisa SA

Performa Real Estate

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Performa Real Estate are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat weak primary indicators, Performa Real may actually be approaching a critical reversion point that can send shares even higher in January 2025.

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. Despite uncertain performance in the last few months, the Stock's technical and fundamental 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.

Pair Trading with Performa Real and Energisa

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

The idea behind Performa Real Estate and Energisa 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.