Correlation Between Energia Latina and Besalco Sa

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Can any of the company-specific risk be diversified away by investing in both Energia Latina and Besalco 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 Energia Latina and Besalco Sa 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 Besalco Sa, you can compare the effects of market volatilities on Energia Latina and Besalco 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 Energia Latina with a short position of Besalco Sa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Energia Latina and Besalco Sa.

Diversification Opportunities for Energia Latina and Besalco Sa

0.38
  Correlation Coefficient

Weak diversification

The 3 months correlation between Energia and Besalco is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Energia Latina SA and Besalco Sa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Besalco Sa 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 Besalco Sa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Besalco Sa has no effect on the direction of Energia Latina i.e., Energia Latina and Besalco Sa go up and down completely randomly.

Pair Corralation between Energia Latina and Besalco Sa

If you would invest  93,500  in Energia Latina SA on September 5, 2024 and sell it today you would earn a total of  0.00  from holding Energia Latina SA or generate 0.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy86.96%
ValuesDaily Returns

Energia Latina SA  vs.  Besalco Sa

 Performance 
       Timeline  
Energia Latina SA 

Risk-Adjusted Performance

10 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Energia Latina SA are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong essential indicators, Energia Latina is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.
Besalco Sa 

Risk-Adjusted Performance

4 of 100

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

Energia Latina and Besalco Sa Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Energia Latina and Besalco Sa

The main advantage of trading using opposite Energia Latina and Besalco Sa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Energia Latina position performs unexpectedly, Besalco 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 Besalco Sa will offset losses from the drop in Besalco Sa's long position.
The idea behind Energia Latina SA and Besalco 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.
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.

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