Correlation Between Energia Latina and Sociedad Matriz
Can any of the company-specific risk be diversified away by investing in both Energia Latina and Sociedad Matriz 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 Sociedad Matriz 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 Sociedad Matriz SAAM, you can compare the effects of market volatilities on Energia Latina and Sociedad Matriz 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 Sociedad Matriz. Check out your portfolio center. Please also check ongoing floating volatility patterns of Energia Latina and Sociedad Matriz.
Diversification Opportunities for Energia Latina and Sociedad Matriz
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Energia and Sociedad is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Energia Latina SA and Sociedad Matriz SAAM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sociedad Matriz SAAM 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 Sociedad Matriz. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sociedad Matriz SAAM has no effect on the direction of Energia Latina i.e., Energia Latina and Sociedad Matriz go up and down completely randomly.
Pair Corralation between Energia Latina and Sociedad Matriz
Assuming the 90 days trading horizon Energia Latina SA is expected to generate 0.95 times more return on investment than Sociedad Matriz. However, Energia Latina SA is 1.05 times less risky than Sociedad Matriz. It trades about 0.08 of its potential returns per unit of risk. Sociedad Matriz SAAM is currently generating about 0.07 per unit of risk. If you would invest 80,001 in Energia Latina SA on August 31, 2024 and sell it today you would earn a total of 13,499 from holding Energia Latina SA or generate 16.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 48.62% |
| Values | Daily Returns |
Energia Latina SA vs. Sociedad Matriz SAAM
Performance |
| Timeline |
| Energia Latina SA |
| Sociedad Matriz SAAM |
Energia Latina and Sociedad Matriz Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Energia Latina and Sociedad Matriz
The main advantage of trading using opposite Energia Latina and Sociedad Matriz positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Energia Latina position performs unexpectedly, Sociedad Matriz 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 Sociedad Matriz will offset losses from the drop in Sociedad Matriz's long position.| Energia Latina vs. LATAM Airlines Group | Energia Latina vs. Multiexport Foods SA | Energia Latina vs. Banco de Credito |
| Sociedad Matriz vs. Vapores | Sociedad Matriz vs. Empresas CMPC | Sociedad Matriz vs. Empresas Copec SA | Sociedad Matriz vs. Salfacorp |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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