Correlation Between Energisa and Petro Rio
Can any of the company-specific risk be diversified away by investing in both Energisa and Petro Rio 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 and Petro Rio into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Energisa SA and Petro Rio SA, you can compare the effects of market volatilities on Energisa and Petro Rio 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 with a short position of Petro Rio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Energisa and Petro Rio.
Diversification Opportunities for Energisa and Petro Rio
Poor diversification
The 3 months correlation between Energisa and Petro is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Energisa SA and Petro Rio SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Petro Rio SA and Energisa 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 SA are associated (or correlated) with Petro Rio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Petro Rio SA has no effect on the direction of Energisa i.e., Energisa and Petro Rio go up and down completely randomly.
Pair Corralation between Energisa and Petro Rio
Assuming the 90 days trading horizon Energisa is expected to generate 3.2 times less return on investment than Petro Rio. But when comparing it to its historical volatility, Energisa SA is 1.35 times less risky than Petro Rio. It trades about 0.03 of its potential returns per unit of risk. Petro Rio SA is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 2,172 in Petro Rio SA on March 29, 2024 and sell it today you would earn a total of 2,130 from holding Petro Rio SA or generate 98.07% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 99.8% |
Values | Daily Returns |
Energisa SA vs. Petro Rio SA
Performance |
Timeline |
Energisa SA |
Petro Rio SA |
Energisa and Petro Rio Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Energisa and Petro Rio
The main advantage of trading using opposite Energisa and Petro Rio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Energisa position performs unexpectedly, Petro Rio 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 Petro Rio will offset losses from the drop in Petro Rio's long position.Energisa vs. Centrais Eltricas Brasileiras | Energisa vs. Centrais Eltricas Brasileiras | Energisa vs. Energisa SA | Energisa vs. CTEEP Companhia |
Petro Rio vs. PDG Realty SA | Petro Rio vs. Positivo Tecnologia SA | Petro Rio vs. Rossi Residencial SA | Petro Rio vs. Eternit SA |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
Other Complementary Tools
Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences |