Correlation Between BB Seguridade and ISA ENERGIA

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

By analyzing existing cross correlation between BB Seguridade Participacoes and ISA ENERGIA BRASIL, you can compare the effects of market volatilities on BB Seguridade and ISA ENERGIA 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 BB Seguridade with a short position of ISA ENERGIA. Check out your portfolio center. Please also check ongoing floating volatility patterns of BB Seguridade and ISA ENERGIA.

Diversification Opportunities for BB Seguridade and ISA ENERGIA

0.2

Correlation Coefficient

BB Seguridade  ISA ENERGIA

Modest diversification

The 3 months correlation between BBSE3 and ISA is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding BB Seguridade Participacoes and ISA ENERGIA BRASIL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ISA ENERGIA BRASIL and BB Seguridade 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 BB Seguridade Participacoes are associated (or correlated) with ISA ENERGIA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ISA ENERGIA BRASIL has no effect on the direction of BB Seguridade i.e., BB Seguridade and ISA ENERGIA go up and down completely randomly.

Pair Corralation between BB Seguridade and ISA ENERGIA

Assuming the 90 days trading horizon BB Seguridade Participacoes is expected to under-perform the ISA ENERGIA. In addition to that, BB Seguridade is 1.25 times more volatile than ISA ENERGIA BRASIL. It trades about -0.2 of its total potential returns per unit of risk. ISA ENERGIA BRASIL is currently generating about 0.01 per unit of volatility. If you would invest  2,241  in ISA ENERGIA BRASIL on April 21, 2025 and sell it today you would earn a total of  3.00  from holding ISA ENERGIA BRASIL or generate 0.13% return on investment over 90 days.

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

BB Seguridade Participacoes  vs.  ISA ENERGIA BRASIL

BB Seguridade Partic

Risk-Adjusted Performance

Very Weak

Over the last 90 days BB Seguridade Participacoes 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 August 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

ISA ENERGIA BRASIL

Risk-Adjusted Performance

Very Weak

Over the last 90 days ISA ENERGIA BRASIL has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, ISA ENERGIA is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with BB Seguridade and ISA ENERGIA

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

The idea behind BB Seguridade Participacoes and ISA ENERGIA BRASIL 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.