Correlation Between Enjoy SA and Parq Arauco

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Can any of the company-specific risk be diversified away by investing in both Enjoy SA and Parq Arauco 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 Enjoy SA and Parq Arauco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Enjoy SA and Parq Arauco, you can compare the effects of market volatilities on Enjoy SA and Parq Arauco 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 Enjoy SA with a short position of Parq Arauco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enjoy SA and Parq Arauco.

Diversification Opportunities for Enjoy SA and Parq Arauco

0.22
  Correlation Coefficient

Modest diversification

The 3 months correlation between Enjoy and Parq is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Enjoy SA and Parq Arauco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Parq Arauco and Enjoy SA 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 Enjoy SA are associated (or correlated) with Parq Arauco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Parq Arauco has no effect on the direction of Enjoy SA i.e., Enjoy SA and Parq Arauco go up and down completely randomly.

Pair Corralation between Enjoy SA and Parq Arauco

Assuming the 90 days trading horizon Enjoy SA is expected to under-perform the Parq Arauco. In addition to that, Enjoy SA is 3.12 times more volatile than Parq Arauco. It trades about -0.22 of its total potential returns per unit of risk. Parq Arauco is currently generating about -0.01 per unit of volatility. If you would invest  157,890  in Parq Arauco on September 1, 2024 and sell it today you would lose (690.00) from holding Parq Arauco or give up 0.44% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy95.24%
ValuesDaily Returns

Enjoy SA  vs.  Parq Arauco

 Performance 
       Timeline  
Enjoy SA 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Enjoy SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in December 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.
Parq Arauco 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Parq Arauco are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Parq Arauco is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Enjoy SA and Parq Arauco Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Enjoy SA and Parq Arauco

The main advantage of trading using opposite Enjoy SA and Parq Arauco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enjoy SA position performs unexpectedly, Parq Arauco 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 Parq Arauco will offset losses from the drop in Parq Arauco's long position.
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The idea behind Enjoy SA and Parq Arauco 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.
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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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.

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