Correlation Between SPORT LISBOA and CIG PANNONIA

Can any of the company-specific risk be diversified away by investing in both SPORT LISBOA and CIG PANNONIA 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 SPORT LISBOA and CIG PANNONIA into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between SPORT LISBOA E and CIG PANNONIA LIFE, you can compare the effects of market volatilities on SPORT LISBOA and CIG PANNONIA 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 SPORT LISBOA with a short position of CIG PANNONIA. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPORT LISBOA and CIG PANNONIA.

Diversification Opportunities for SPORT LISBOA and CIG PANNONIA

0.77

Correlation Coefficient

SPORT LISBOA  CIG PANNONIA

Poor diversification

The 3 months correlation between SPORT and CIG is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding SPORT LISBOA E and CIG PANNONIA LIFE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CIG PANNONIA LIFE and SPORT LISBOA 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 SPORT LISBOA E are associated (or correlated) with CIG PANNONIA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CIG PANNONIA LIFE has no effect on the direction of SPORT LISBOA i.e., SPORT LISBOA and CIG PANNONIA go up and down completely randomly.

Pair Corralation between SPORT LISBOA and CIG PANNONIA

Assuming the 90 days horizon SPORT LISBOA E is expected to generate 1.23 times more return on investment than CIG PANNONIA. However, SPORT LISBOA is 1.23 times more volatile than CIG PANNONIA LIFE. It trades about 0.17 of its potential returns per unit of risk. CIG PANNONIA LIFE is currently generating about 0.07 per unit of risk. If you would invest  368.00  in SPORT LISBOA E on April 24, 2025 and sell it today you would earn a total of  176.00  from holding SPORT LISBOA E or generate 47.83% return on investment over 90 days.

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

SPORT LISBOA E  vs.  CIG PANNONIA LIFE

SPORT LISBOA E

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SPORT LISBOA E are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, SPORT LISBOA reported solid returns over the last few months and may actually be approaching a breakup point.

CIG PANNONIA LIFE

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CIG PANNONIA LIFE are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile forward-looking signals, CIG PANNONIA reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SPORT LISBOA and CIG PANNONIA

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

The idea behind SPORT LISBOA E and CIG PANNONIA LIFE 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.