Correlation Between Montauk Renewables and Companhia

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

By analyzing existing cross correlation between Montauk Renewables and Companhia de Saneamento, you can compare the effects of market volatilities on Montauk Renewables and Companhia 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 Montauk Renewables with a short position of Companhia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Montauk Renewables and Companhia.

Diversification Opportunities for Montauk Renewables and Companhia

0.08

Correlation Coefficient

Montauk Renewables  Companhia

Significant diversification

The 3 months correlation between Montauk and Companhia is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Montauk Renewables and Companhia de Saneamento in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Companhia de Saneamento and Montauk Renewables 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 Montauk Renewables are associated (or correlated) with Companhia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Companhia de Saneamento has no effect on the direction of Montauk Renewables i.e., Montauk Renewables and Companhia go up and down completely randomly.

Pair Corralation between Montauk Renewables and Companhia

Given the investment horizon of 90 days Montauk Renewables is expected to generate 3.29 times more return on investment than Companhia. However, Montauk Renewables is 3.29 times more volatile than Companhia de Saneamento. It trades about 0.01 of its potential returns per unit of risk. Companhia de Saneamento is currently generating about -0.01 per unit of risk. If you would invest  214.00  in Montauk Renewables on May 5, 2025 and sell it today you would lose (8.00) from holding Montauk Renewables or give up 3.74% of portfolio value over 90 days.

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

Montauk Renewables  vs.  Companhia de Saneamento

Montauk Renewables

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Montauk Renewables are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Montauk Renewables is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Companhia de Saneamento

Risk-Adjusted Performance

Very Weak

Over the last 90 days Companhia de Saneamento has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental drivers, Companhia is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Montauk Renewables and Companhia

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

The idea behind Montauk Renewables and Companhia de Saneamento 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.