Correlation Between ISA ENERGIA and Cia De

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

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

Diversification Opportunities for ISA ENERGIA and Cia De

0.32

Correlation Coefficient

ISA ENERGIA  Cia De

Weak diversification

The 3 months correlation between ISA and Cia is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding ISA ENERGIA BRASIL and Cia de Ferro in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cia de Ferro and ISA ENERGIA 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 ISA ENERGIA BRASIL are associated (or correlated) with Cia De. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cia de Ferro has no effect on the direction of ISA ENERGIA i.e., ISA ENERGIA and Cia De go up and down completely randomly.

Pair Corralation between ISA ENERGIA and Cia De

Assuming the 90 days trading horizon ISA ENERGIA BRASIL is expected to generate 0.67 times more return on investment than Cia De. However, ISA ENERGIA BRASIL is 1.5 times less risky than Cia De. It trades about -0.03 of its potential returns per unit of risk. Cia de Ferro is currently generating about -0.06 per unit of risk. If you would invest  2,293  in ISA ENERGIA BRASIL on April 24, 2025 and sell it today you would lose (49.00) from holding ISA ENERGIA BRASIL or give up 2.14% of portfolio value over 90 days.

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

ISA ENERGIA BRASIL  vs.  Cia de Ferro

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.

Cia de Ferro

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cia de Ferro has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Preferred Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with ISA ENERGIA and Cia De

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

The idea behind ISA ENERGIA BRASIL and Cia de Ferro 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.