Correlation Between Central Puerto and Enel Chile
Can any of the company-specific risk be diversified away by investing in both Central Puerto and Enel Chile 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 Central Puerto and Enel Chile into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Central Puerto SA and Enel Chile SA, you can compare the effects of market volatilities on Central Puerto and Enel Chile 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 Central Puerto with a short position of Enel Chile. Check out your portfolio center. Please also check ongoing floating volatility patterns of Central Puerto and Enel Chile.
Diversification Opportunities for Central Puerto and Enel Chile
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Central and Enel is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Central Puerto SA and Enel Chile SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enel Chile SA and Central Puerto 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 Central Puerto SA are associated (or correlated) with Enel Chile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enel Chile SA has no effect on the direction of Central Puerto i.e., Central Puerto and Enel Chile go up and down completely randomly.
Pair Corralation between Central Puerto and Enel Chile
Given the investment horizon of 90 days Central Puerto SA is expected to generate 1.55 times more return on investment than Enel Chile. However, Central Puerto is 1.55 times more volatile than Enel Chile SA. It trades about 0.07 of its potential returns per unit of risk. Enel Chile SA is currently generating about 0.05 per unit of risk. If you would invest 543.00 in Central Puerto SA on October 20, 2024 and sell it today you would earn a total of 777.00 from holding Central Puerto SA or generate 143.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Central Puerto SA vs. Enel Chile SA
Performance |
| Timeline |
| Central Puerto SA |
| Enel Chile SA |
Central Puerto and Enel Chile Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Central Puerto and Enel Chile
The main advantage of trading using opposite Central Puerto and Enel Chile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Central Puerto position performs unexpectedly, Enel Chile 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 Enel Chile will offset losses from the drop in Enel Chile's long position.| Central Puerto vs. Korea Electric Power | Central Puerto vs. Centrais Electricas Brasileiras | Central Puerto vs. MGE Energy | Central Puerto vs. IDACORP |
| Enel Chile vs. Centrais Eltricas Brasileiras | Enel Chile vs. Korea Electric Power | Enel Chile vs. Central Puerto SA | Enel Chile vs. CMS Energy |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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