Correlation Between LATAM Airlines and Salfacorp
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By analyzing existing cross correlation between LATAM Airlines Group and Salfacorp, you can compare the effects of market volatilities on LATAM Airlines and Salfacorp 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 Salfacorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of LATAM Airlines and Salfacorp.
Diversification Opportunities for LATAM Airlines and Salfacorp
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between LATAM and Salfacorp is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding LATAM Airlines Group and Salfacorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Salfacorp 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 Salfacorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Salfacorp has no effect on the direction of LATAM Airlines i.e., LATAM Airlines and Salfacorp go up and down completely randomly.
Pair Corralation between LATAM Airlines and Salfacorp
Assuming the 90 days trading horizon LATAM Airlines Group is expected to generate 1.33 times more return on investment than Salfacorp. However, LATAM Airlines is 1.33 times more volatile than Salfacorp. It trades about 0.11 of its potential returns per unit of risk. Salfacorp is currently generating about 0.09 per unit of risk. If you would invest 925.00 in LATAM Airlines Group on September 20, 2024 and sell it today you would earn a total of 469.00 from holding LATAM Airlines Group or generate 50.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LATAM Airlines Group vs. Salfacorp
Performance |
| Timeline |
| LATAM Airlines Group |
| Salfacorp |
LATAM Airlines and Salfacorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LATAM Airlines and Salfacorp
The main advantage of trading using opposite LATAM Airlines and Salfacorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LATAM Airlines position performs unexpectedly, Salfacorp 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 Salfacorp will offset losses from the drop in Salfacorp's long position.| LATAM Airlines vs. Falabella | LATAM Airlines vs. Cencosud | LATAM Airlines vs. Enjoy SA | LATAM Airlines vs. Empresas Copec SA |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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