Correlation Between LATAM Airlines and Sociedad
Can any of the company-specific risk be diversified away by investing in both LATAM Airlines and Sociedad 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 LATAM Airlines and Sociedad into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LATAM Airlines Group and Sociedad De Inversiones, you can compare the effects of market volatilities on LATAM Airlines and Sociedad 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 LATAM Airlines with a short position of Sociedad. Check out your portfolio center. Please also check ongoing floating volatility patterns of LATAM Airlines and Sociedad.
Diversification Opportunities for LATAM Airlines and Sociedad
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between LATAM and Sociedad is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding LATAM Airlines Group and Sociedad De Inversiones in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sociedad De Inversiones and LATAM Airlines 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 LATAM Airlines Group are associated (or correlated) with Sociedad. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sociedad De Inversiones has no effect on the direction of LATAM Airlines i.e., LATAM Airlines and Sociedad go up and down completely randomly.
Pair Corralation between LATAM Airlines and Sociedad
If you would invest 1,315 in LATAM Airlines Group on October 25, 2024 and sell it today you would earn a total of 61.00 from holding LATAM Airlines Group or generate 4.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 0.0% |
| Values | Daily Returns |
LATAM Airlines Group vs. Sociedad De Inversiones
Performance |
| Timeline |
| LATAM Airlines Group |
| Sociedad De Inversiones |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
LATAM Airlines and Sociedad Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LATAM Airlines and Sociedad
The main advantage of trading using opposite LATAM Airlines and Sociedad positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LATAM Airlines position performs unexpectedly, Sociedad 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 will offset losses from the drop in Sociedad's long position.| LATAM Airlines vs. Falabella | LATAM Airlines vs. Cencosud | LATAM Airlines vs. Enjoy SA | LATAM Airlines vs. Sociedad Qumica y |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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