Correlation Between Compania and Invernova
Can any of the company-specific risk be diversified away by investing in both Compania and Invernova 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 Compania and Invernova into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Compania De Inversiones and Invernova SA, you can compare the effects of market volatilities on Compania and Invernova 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 Compania with a short position of Invernova. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compania and Invernova.
Diversification Opportunities for Compania and Invernova
Pay attention - limited upside
The 3 months correlation between Compania and Invernova is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Compania De Inversiones and Invernova SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invernova SA and Compania 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 Compania De Inversiones are associated (or correlated) with Invernova. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invernova SA has no effect on the direction of Compania i.e., Compania and Invernova go up and down completely randomly.
Pair Corralation between Compania and Invernova
If you would invest (100.00) in Invernova SA on September 24, 2024 and sell it today you would earn a total of 100.00 from holding Invernova SA or generate -100.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Compania De Inversiones vs. Invernova SA
Performance |
| Timeline |
| Compania De Inversiones |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Invernova SA |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Compania and Invernova Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Compania and Invernova
The main advantage of trading using opposite Compania and Invernova positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compania position performs unexpectedly, Invernova 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 Invernova will offset losses from the drop in Invernova's long position.The idea behind Compania De Inversiones and Invernova 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.| Invernova vs. Aguas Andinas SA | Invernova vs. Parq Arauco | Invernova vs. Enel Generacin Chile | Invernova vs. Sociedad Matriz SAAM |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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