Correlation Between CTEEP Companhia and Eneva SA

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

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

Diversification Opportunities for CTEEP Companhia and Eneva SA

0.43

Correlation Coefficient

CTEEP Companhia  Eneva SA

Very weak diversification

The 3 months correlation between CTEEP and Eneva is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding CTEEP Companhia and Eneva SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eneva SA and CTEEP Companhia 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 CTEEP Companhia 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 CTEEP Companhia i.e., CTEEP Companhia and Eneva SA go up and down completely randomly.

Pair Corralation between CTEEP Companhia and Eneva SA

Assuming the 90 days trading horizon CTEEP Companhia is expected to generate 0.83 times more return on investment than Eneva SA. However, CTEEP Companhia is 1.2 times less risky than Eneva SA. It trades about -0.03 of its potential returns per unit of risk. Eneva SA is currently generating about -0.17 per unit of risk. If you would invest  2,474  in CTEEP Companhia on September 1, 2024 and sell it today you would lose (58.00) from holding CTEEP Companhia or give up 2.34% of portfolio value over 90 days.

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

CTEEP Companhia  vs.  Eneva SA

CTEEP Companhia

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CTEEP Companhia has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, CTEEP Companhia is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the 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 December 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with CTEEP Companhia and Eneva SA

The main advantage of trading using opposite CTEEP Companhia and Eneva SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CTEEP Companhia 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 CTEEP Companhia 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.