Correlation Between CAP SA and Energia Latina
Can any of the company-specific risk be diversified away by investing in both CAP SA and Energia Latina 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 Energia Latina into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CAP SA and Energia Latina SA, you can compare the effects of market volatilities on CAP SA and Energia Latina 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 Energia Latina. Check out your portfolio center. Please also check ongoing floating volatility patterns of CAP SA and Energia Latina.
Diversification Opportunities for CAP SA and Energia Latina
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between CAP and Energia is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding CAP SA and Energia Latina SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Energia Latina SA 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 Energia Latina. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Energia Latina SA has no effect on the direction of CAP SA i.e., CAP SA and Energia Latina go up and down completely randomly.
Pair Corralation between CAP SA and Energia Latina
Assuming the 90 days trading horizon CAP SA is expected to under-perform the Energia Latina. But the stock apears to be less risky and, when comparing its historical volatility, CAP SA is 1.48 times less risky than Energia Latina. The stock trades about -0.02 of its potential returns per unit of risk. The Energia Latina SA is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 76,000 in Energia Latina SA on September 20, 2024 and sell it today you would earn a total of 17,500 from holding Energia Latina SA or generate 23.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 61.55% |
| Values | Daily Returns |
CAP SA vs. Energia Latina SA
Performance |
| Timeline |
| CAP SA |
| Energia Latina SA |
CAP SA and Energia Latina Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CAP SA and Energia Latina
The main advantage of trading using opposite CAP SA and Energia Latina positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CAP SA position performs unexpectedly, Energia Latina 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 Energia Latina will offset losses from the drop in Energia Latina's long position.The idea behind CAP SA and Energia Latina 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.| Energia Latina vs. CAP SA | Energia Latina vs. Salfacorp | Energia Latina vs. Vina Concha To | Energia Latina vs. Sociedad Matriz SAAM |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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