Correlation Between Empresas Copec and Hites SA
Can any of the company-specific risk be diversified away by investing in both Empresas Copec and Hites SA 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 Copec and Hites SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Empresas Copec SA and Hites SA, you can compare the effects of market volatilities on Empresas Copec and Hites SA 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 Copec with a short position of Hites SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Empresas Copec and Hites SA.
Diversification Opportunities for Empresas Copec and Hites SA
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Empresas and Hites is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Empresas Copec SA and Hites SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hites SA and Empresas Copec 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 Copec SA are associated (or correlated) with Hites SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hites SA has no effect on the direction of Empresas Copec i.e., Empresas Copec and Hites SA go up and down completely randomly.
Pair Corralation between Empresas Copec and Hites SA
Assuming the 90 days trading horizon Empresas Copec SA is expected to generate 0.78 times more return on investment than Hites SA. However, Empresas Copec SA is 1.28 times less risky than Hites SA. It trades about 0.01 of its potential returns per unit of risk. Hites SA is currently generating about -0.45 per unit of risk. If you would invest 619,000 in Empresas Copec SA on September 5, 2024 and sell it today you would earn a total of 1,000.00 from holding Empresas Copec SA or generate 0.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 91.3% |
| Values | Daily Returns |
Empresas Copec SA vs. Hites SA
Performance |
| Timeline |
| Empresas Copec SA |
| Hites SA |
Empresas Copec and Hites SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Empresas Copec and Hites SA
The main advantage of trading using opposite Empresas Copec and Hites SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Empresas Copec position performs unexpectedly, Hites SA 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 Hites SA will offset losses from the drop in Hites SA's long position.The idea behind Empresas Copec SA and Hites 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.| Hites SA vs. Cencosud | Hites SA vs. Empresas Copec SA | Hites SA vs. LATAM Airlines Group | Hites SA 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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