Correlation Between Las Condes and Colbun

Can any of the company-specific risk be diversified away by investing in both Las Condes and Colbun 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 Las Condes and Colbun into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Las Condes and Colbun, you can compare the effects of market volatilities on Las Condes and Colbun 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 Las Condes with a short position of Colbun. Check out your portfolio center. Please also check ongoing floating volatility patterns of Las Condes and Colbun.

Diversification Opportunities for Las Condes and Colbun

-0.15

Correlation Coefficient

Las Condes  Colbun

Good diversification

The 3 months correlation between Las and Colbun is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Las Condes and Colbun in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Colbun and Las Condes 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 Las Condes are associated (or correlated) with Colbun. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Colbun has no effect on the direction of Las Condes i.e., Las Condes and Colbun go up and down completely randomly.

Pair Corralation between Las Condes and Colbun

Assuming the 90 days trading horizon Las Condes is expected to under-perform the Colbun. In addition to that, Las Condes is 3.27 times more volatile than Colbun. It trades about -0.02 of its total potential returns per unit of risk. Colbun is currently generating about 0.08 per unit of volatility. If you would invest  11,851  in Colbun on September 15, 2024 and sell it today you would earn a total of  464.00  from holding Colbun or generate 3.92% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	91.67%
Values	Daily Returns

Las Condes  vs.  Colbun

Las Condes

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Las Condes has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Las Condes is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Colbun

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Colbun are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong essential indicators, Colbun is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Las Condes and Colbun

The main advantage of trading using opposite Las Condes and Colbun positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Las Condes position performs unexpectedly, Colbun 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 Colbun will offset losses from the drop in Colbun's long position.

The idea behind Las Condes and Colbun 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.

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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.