Correlation Between Cosan and Companhia Energetica

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Can any of the company-specific risk be diversified away by investing in both Cosan and Companhia Energetica 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 Cosan and Companhia Energetica into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cosan Limited and Companhia Energetica De, you can compare the effects of market volatilities on Cosan and Companhia Energetica 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 Cosan with a short position of Companhia Energetica. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cosan and Companhia Energetica.

Diversification Opportunities for Cosan and Companhia Energetica

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  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Cosan and Companhia is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Cosan Limited and Companhia Energetica De in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Companhia Energetica and Cosan 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 Cosan Limited are associated (or correlated) with Companhia Energetica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Companhia Energetica has no effect on the direction of Cosan i.e., Cosan and Companhia Energetica go up and down completely randomly.

Pair Corralation between Cosan and Companhia Energetica

If you would invest  235.00  in Companhia Energetica De on December 30, 2023 and sell it today you would earn a total of  12.00  from holding Companhia Energetica De or generate 5.11% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy0.0%
ValuesDaily Returns

Cosan Limited  vs.  Companhia Energetica De

 Performance 
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Cosan Limited 

Risk-Adjusted Performance

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Over the last 90 days Cosan Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Cosan is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.
Companhia Energetica 

Risk-Adjusted Performance

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Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Companhia Energetica De are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating forward indicators, Companhia Energetica may actually be approaching a critical reversion point that can send shares even higher in April 2024.

Cosan and Companhia Energetica Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Cosan and Companhia Energetica

The main advantage of trading using opposite Cosan and Companhia Energetica positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cosan position performs unexpectedly, Companhia Energetica 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 Companhia Energetica will offset losses from the drop in Companhia Energetica's long position.
The idea behind Cosan Limited and Companhia Energetica De 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..

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