Correlation Between Energia Latina and Administradora Americana
Can any of the company-specific risk be diversified away by investing in both Energia Latina and Administradora Americana 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 Energia Latina and Administradora Americana into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Energia Latina SA and Administradora Americana de, you can compare the effects of market volatilities on Energia Latina and Administradora Americana 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 Energia Latina with a short position of Administradora Americana. Check out your portfolio center. Please also check ongoing floating volatility patterns of Energia Latina and Administradora Americana.
Diversification Opportunities for Energia Latina and Administradora Americana
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Energia and Administradora is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Energia Latina SA and Administradora Americana de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Administradora Americana and Energia Latina 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 Energia Latina SA are associated (or correlated) with Administradora Americana. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Administradora Americana has no effect on the direction of Energia Latina i.e., Energia Latina and Administradora Americana go up and down completely randomly.
Pair Corralation between Energia Latina and Administradora Americana
Assuming the 90 days trading horizon Energia Latina SA is expected to generate 1.52 times more return on investment than Administradora Americana. However, Energia Latina is 1.52 times more volatile than Administradora Americana de. It trades about 0.07 of its potential returns per unit of risk. Administradora Americana de is currently generating about 0.04 per unit of risk. If you would invest 69,218 in Energia Latina SA on August 24, 2024 and sell it today you would earn a total of 24,282 from holding Energia Latina SA or generate 35.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 53.83% |
| Values | Daily Returns |
Energia Latina SA vs. Administradora Americana de
Performance |
| Timeline |
| Energia Latina SA |
| Administradora Americana |
Energia Latina and Administradora Americana Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Energia Latina and Administradora Americana
The main advantage of trading using opposite Energia Latina and Administradora Americana positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Energia Latina position performs unexpectedly, Administradora Americana 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 Administradora Americana will offset losses from the drop in Administradora Americana's long position.| Energia Latina vs. Aguas Andinas SA | Energia Latina vs. Parq Arauco | Energia Latina vs. Enel Generacin Chile | Energia Latina vs. Sociedad Matriz SAAM |
| Administradora Americana vs. Multiexport Foods SA | Administradora Americana vs. Sociedad Matriz SAAM | Administradora Americana vs. AFP Planvital SA | Administradora Americana vs. Nitratos de Chile |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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