Correlation Between SDI Properties and Energisa

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

By analyzing existing cross correlation between SDI Properties Fundo and Energisa SA, you can compare the effects of market volatilities on SDI Properties and Energisa 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 SDI Properties with a short position of Energisa. Check out your portfolio center. Please also check ongoing floating volatility patterns of SDI Properties and Energisa.

Diversification Opportunities for SDI Properties and Energisa

-0.21

Correlation Coefficient

SDI Properties  Energisa

Very good diversification

The 3 months correlation between SDI and Energisa is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding SDI Properties Fundo and Energisa SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Energisa SA and SDI Properties 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 SDI Properties Fundo are associated (or correlated) with Energisa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Energisa SA has no effect on the direction of SDI Properties i.e., SDI Properties and Energisa go up and down completely randomly.

Pair Corralation between SDI Properties and Energisa

Assuming the 90 days trading horizon SDI Properties is expected to generate 1.34 times less return on investment than Energisa. But when comparing it to its historical volatility, SDI Properties Fundo is 1.49 times less risky than Energisa. It trades about 0.01 of its potential returns per unit of risk. Energisa SA is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  4,505  in Energisa SA on April 24, 2025 and sell it today you would earn a total of  10.00  from holding Energisa SA or generate 0.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

SDI Properties Fundo  vs.  Energisa SA

SDI Properties Fundo

Risk-Adjusted Performance

Very Weak

Over the last 90 days SDI Properties Fundo has generated negative risk-adjusted returns adding no value to fund investors. Despite somewhat strong basic indicators, SDI Properties is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Energisa SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Energisa SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical and fundamental indicators, Energisa is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with SDI Properties and Energisa

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

The idea behind SDI Properties Fundo and Energisa SA 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.