Correlation Between Energia Latina and Colbun
Can any of the company-specific risk be diversified away by investing in both Energia Latina and Colbun 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 Colbun 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 Colbun, you can compare the effects of market volatilities on Energia Latina and Colbun 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 Colbun. Check out your portfolio center. Please also check ongoing floating volatility patterns of Energia Latina and Colbun.
Diversification Opportunities for Energia Latina and Colbun
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Energia and Colbun is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Energia Latina SA and Colbun in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Colbun 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 Colbun. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Colbun has no effect on the direction of Energia Latina i.e., Energia Latina and Colbun go up and down completely randomly.
Pair Corralation between Energia Latina and Colbun
Assuming the 90 days trading horizon Energia Latina SA is expected to generate 0.51 times more return on investment than Colbun. However, Energia Latina SA is 1.95 times less risky than Colbun. It trades about 0.13 of its potential returns per unit of risk. Colbun is currently generating about 0.04 per unit of risk. If you would invest 90,000 in Energia Latina SA on September 2, 2024 and sell it today you would earn a total of 3,500 from holding Energia Latina SA or generate 3.89% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 98.36% |
Values | Daily Returns |
Energia Latina SA vs. Colbun
Performance |
Timeline |
Energia Latina SA |
Colbun |
Energia Latina and Colbun Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Energia Latina and Colbun
The main advantage of trading using opposite Energia Latina and Colbun positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Energia Latina position performs unexpectedly, Colbun 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 Colbun will offset losses from the drop in Colbun'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 |
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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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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