Correlation Between Instituto Rosenbusch and Enel Generacion
Can any of the company-specific risk be diversified away by investing in both Instituto Rosenbusch and Enel Generacion 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 Instituto Rosenbusch and Enel Generacion into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Instituto Rosenbusch SA and Enel Generacion Costanera, you can compare the effects of market volatilities on Instituto Rosenbusch and Enel Generacion 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 Instituto Rosenbusch with a short position of Enel Generacion. Check out your portfolio center. Please also check ongoing floating volatility patterns of Instituto Rosenbusch and Enel Generacion.
Diversification Opportunities for Instituto Rosenbusch and Enel Generacion
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Instituto and Enel is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Instituto Rosenbusch SA and Enel Generacion Costanera in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enel Generacion Costanera and Instituto Rosenbusch 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 Instituto Rosenbusch SA are associated (or correlated) with Enel Generacion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enel Generacion Costanera has no effect on the direction of Instituto Rosenbusch i.e., Instituto Rosenbusch and Enel Generacion go up and down completely randomly.
Pair Corralation between Instituto Rosenbusch and Enel Generacion
Assuming the 90 days trading horizon Instituto Rosenbusch SA is expected to under-perform the Enel Generacion. But the stock apears to be less risky and, when comparing its historical volatility, Instituto Rosenbusch SA is 1.34 times less risky than Enel Generacion. The stock trades about -0.18 of its potential returns per unit of risk. The Enel Generacion Costanera is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest 44,550 in Enel Generacion Costanera on October 20, 2024 and sell it today you would earn a total of 10,450 from holding Enel Generacion Costanera or generate 23.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Instituto Rosenbusch SA vs. Enel Generacion Costanera
Performance |
| Timeline |
| Instituto Rosenbusch |
| Enel Generacion Costanera |
Instituto Rosenbusch and Enel Generacion Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Instituto Rosenbusch and Enel Generacion
The main advantage of trading using opposite Instituto Rosenbusch and Enel Generacion positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Instituto Rosenbusch position performs unexpectedly, Enel Generacion 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 Enel Generacion will offset losses from the drop in Enel Generacion's long position.| Instituto Rosenbusch vs. Harmony Gold Mining | Instituto Rosenbusch vs. Agrometal SAI | Instituto Rosenbusch vs. Transportadora de Gas | Instituto Rosenbusch vs. United States Steel |
| Enel Generacion vs. Agrometal SAI | Enel Generacion vs. Telecom Argentina | Enel Generacion vs. Compania de Transporte | Enel Generacion vs. Harmony Gold Mining |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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