Correlation Between Empresas CMPC and Enel Amricas
Can any of the company-specific risk be diversified away by investing in both Empresas CMPC and Enel Amricas 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 Empresas CMPC and Enel Amricas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Empresas CMPC and Enel Amricas SA, you can compare the effects of market volatilities on Empresas CMPC and Enel Amricas 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 Empresas CMPC with a short position of Enel Amricas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Empresas CMPC and Enel Amricas.
Diversification Opportunities for Empresas CMPC and Enel Amricas
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Empresas and Enel is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Empresas CMPC and Enel Amricas SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enel Amricas SA and Empresas CMPC 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 Empresas CMPC are associated (or correlated) with Enel Amricas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enel Amricas SA has no effect on the direction of Empresas CMPC i.e., Empresas CMPC and Enel Amricas go up and down completely randomly.
Pair Corralation between Empresas CMPC and Enel Amricas
Assuming the 90 days trading horizon Empresas CMPC is expected to generate 1.26 times more return on investment than Enel Amricas. However, Empresas CMPC is 1.26 times more volatile than Enel Amricas SA. It trades about 0.02 of its potential returns per unit of risk. Enel Amricas SA is currently generating about -0.03 per unit of risk. If you would invest 146,948 in Empresas CMPC on August 28, 2024 and sell it today you would earn a total of 6,052 from holding Empresas CMPC or generate 4.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Empresas CMPC vs. Enel Amricas SA
Performance |
| Timeline |
| Empresas CMPC |
| Enel Amricas SA |
Empresas CMPC and Enel Amricas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Empresas CMPC and Enel Amricas
The main advantage of trading using opposite Empresas CMPC and Enel Amricas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Empresas CMPC position performs unexpectedly, Enel Amricas 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 Amricas will offset losses from the drop in Enel Amricas' long position.| Empresas CMPC vs. Empresas Copec SA | Empresas CMPC vs. Cencosud | Empresas CMPC vs. Falabella | Empresas CMPC vs. Sociedad Qumica y |
| Enel Amricas vs. Empresas Copec SA | Enel Amricas vs. Banco Santander Chile | Enel Amricas vs. Falabella | Enel Amricas vs. Cencosud |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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