Correlation Between Cencosud and LATAM Airlines
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By analyzing existing cross correlation between Cencosud and LATAM Airlines Group, you can compare the effects of market volatilities on Cencosud and LATAM Airlines 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 LATAM Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cencosud and LATAM Airlines.
Diversification Opportunities for Cencosud and LATAM Airlines
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cencosud and LATAM is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Cencosud and LATAM Airlines Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LATAM Airlines Group 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 LATAM Airlines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LATAM Airlines Group has no effect on the direction of Cencosud i.e., Cencosud and LATAM Airlines go up and down completely randomly.
Pair Corralation between Cencosud and LATAM Airlines
Assuming the 90 days trading horizon Cencosud is expected to generate 0.93 times more return on investment than LATAM Airlines. However, Cencosud is 1.08 times less risky than LATAM Airlines. It trades about 0.45 of its potential returns per unit of risk. LATAM Airlines Group is currently generating about 0.26 per unit of risk. If you would invest 219,110 in Cencosud on November 2, 2024 and sell it today you would earn a total of 27,390 from holding Cencosud or generate 12.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cencosud vs. LATAM Airlines Group
Performance |
| Timeline |
| Cencosud |
| LATAM Airlines Group |
Cencosud and LATAM Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cencosud and LATAM Airlines
The main advantage of trading using opposite Cencosud and LATAM Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cencosud position performs unexpectedly, LATAM Airlines 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 LATAM Airlines will offset losses from the drop in LATAM Airlines' long position.| Cencosud vs. Falabella | Cencosud vs. Empresas Copec SA | Cencosud vs. Sociedad Qumica y | Cencosud vs. Banco Santander Chile |
| LATAM Airlines vs. Falabella | LATAM Airlines vs. Cencosud | LATAM Airlines vs. Enjoy SA | LATAM Airlines 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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