Correlation Between Cencosud and Falabella
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By analyzing existing cross correlation between Cencosud and Falabella, you can compare the effects of market volatilities on Cencosud and Falabella 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 Cencosud with a short position of Falabella. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cencosud and Falabella.
Diversification Opportunities for Cencosud and Falabella
Very poor diversification
The 3 months correlation between Cencosud and Falabella is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Cencosud and Falabella in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Falabella and Cencosud 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 Cencosud are associated (or correlated) with Falabella. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Falabella has no effect on the direction of Cencosud i.e., Cencosud and Falabella go up and down completely randomly.
Pair Corralation between Cencosud and Falabella
Assuming the 90 days trading horizon Cencosud is expected to generate 1.34 times more return on investment than Falabella. However, Cencosud is 1.34 times more volatile than Falabella. It trades about 0.48 of its potential returns per unit of risk. Falabella is currently generating about 0.38 per unit of risk. If you would invest 219,000 in Cencosud on November 4, 2024 and sell it today you would earn a total of 31,000 from holding Cencosud or generate 14.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cencosud vs. Falabella
Performance |
| Timeline |
| Cencosud |
| Falabella |
Cencosud and Falabella Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cencosud and Falabella
The main advantage of trading using opposite Cencosud and Falabella positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cencosud position performs unexpectedly, Falabella 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 Falabella will offset losses from the drop in Falabella's long position.| Cencosud vs. Falabella | Cencosud vs. Empresas Copec SA | Cencosud vs. Sociedad Qumica y | Cencosud vs. Banco Santander Chile |
| Falabella vs. Cencosud | Falabella vs. Empresas Copec SA | Falabella vs. LATAM Airlines Group | Falabella vs. Sociedad Qumica y |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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