Correlation Between CAP SA and Engie Energia
Can any of the company-specific risk be diversified away by investing in both CAP SA and Engie 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 CAP SA and Engie Energia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CAP SA and Engie Energia Chile, you can compare the effects of market volatilities on CAP SA and Engie 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 CAP SA with a short position of Engie Energia. Check out your portfolio center. Please also check ongoing floating volatility patterns of CAP SA and Engie Energia.
Diversification Opportunities for CAP SA and Engie Energia
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between CAP and Engie is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding CAP SA and Engie Energia Chile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Engie Energia Chile and CAP SA 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 CAP SA are associated (or correlated) with Engie Energia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Engie Energia Chile has no effect on the direction of CAP SA i.e., CAP SA and Engie Energia go up and down completely randomly.
Pair Corralation between CAP SA and Engie Energia
Assuming the 90 days trading horizon CAP SA is expected to under-perform the Engie Energia. In addition to that, CAP SA is 1.35 times more volatile than Engie Energia Chile. It trades about -0.02 of its total potential returns per unit of risk. Engie Energia Chile is currently generating about 0.09 per unit of volatility. If you would invest 49,000 in Engie Energia Chile on September 20, 2024 and sell it today you would earn a total of 38,710 from holding Engie Energia Chile or generate 79.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CAP SA vs. Engie Energia Chile
Performance |
| Timeline |
| CAP SA |
| Engie Energia Chile |
CAP SA and Engie Energia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CAP SA and Engie Energia
The main advantage of trading using opposite CAP SA and Engie Energia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CAP SA position performs unexpectedly, Engie 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 Engie Energia will offset losses from the drop in Engie Energia's long position.The idea behind CAP SA and Engie Energia Chile 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.| Engie Energia vs. Colbun | Engie Energia vs. Enel Chile SA | Engie Energia vs. CAP SA | Engie Energia vs. Enel Amricas SA |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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