Correlation Between Empresa Nacional and Energia Latina
Can any of the company-specific risk be diversified away by investing in both Empresa Nacional and Energia Latina 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 Empresa Nacional and Energia Latina into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Empresa Nacional de and Energia Latina SA, you can compare the effects of market volatilities on Empresa Nacional and Energia Latina 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 Empresa Nacional with a short position of Energia Latina. Check out your portfolio center. Please also check ongoing floating volatility patterns of Empresa Nacional and Energia Latina.
Diversification Opportunities for Empresa Nacional and Energia Latina
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Empresa and Energia is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Empresa Nacional de and Energia Latina SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Energia Latina SA and Empresa Nacional 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 Empresa Nacional de are associated (or correlated) with Energia Latina. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Energia Latina SA has no effect on the direction of Empresa Nacional i.e., Empresa Nacional and Energia Latina go up and down completely randomly.
Pair Corralation between Empresa Nacional and Energia Latina
Assuming the 90 days trading horizon Empresa Nacional is expected to generate 3.71 times less return on investment than Energia Latina. In addition to that, Empresa Nacional is 1.27 times more volatile than Energia Latina SA. It trades about 0.03 of its total potential returns per unit of risk. Energia Latina SA is currently generating about 0.13 per unit of volatility. If you would invest 75,479 in Energia Latina SA on September 26, 2024 and sell it today you would earn a total of 18,021 from holding Energia Latina SA or generate 23.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 53.77% |
| Values | Daily Returns |
Empresa Nacional de vs. Energia Latina SA
Performance |
| Timeline |
| Empresa Nacional |
| Energia Latina SA |
Empresa Nacional and Energia Latina Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Empresa Nacional and Energia Latina
The main advantage of trading using opposite Empresa Nacional and Energia Latina positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Empresa Nacional position performs unexpectedly, Energia Latina 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 Energia Latina will offset losses from the drop in Energia Latina's long position.| Empresa Nacional vs. Cencosud | Empresa Nacional vs. Empresas Copec SA | Empresa Nacional vs. Falabella | Empresa Nacional vs. Empresas CMPC |
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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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