Correlation Between Las Condes and Enel Amricas

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

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

Diversification Opportunities for Las Condes and Enel Amricas

0.3

Correlation Coefficient

Las Condes  Enel Amricas

Weak diversification

The 3 months correlation between Las and Enel is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Las Condes and Enel Amricas SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enel Amricas SA 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 Enel Amricas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enel Amricas SA has no effect on the direction of Las Condes i.e., Las Condes and Enel Amricas go up and down completely randomly.

Pair Corralation between Las Condes and Enel Amricas

Assuming the 90 days trading horizon Las Condes is expected to generate 2.23 times more return on investment than Enel Amricas. However, Las Condes is 2.23 times more volatile than Enel Amricas SA. It trades about -0.01 of its potential returns per unit of risk. Enel Amricas SA is currently generating about -0.03 per unit of risk. If you would invest  1,498,500  in Las Condes on September 14, 2024 and sell it today you would lose (351,400) from holding Las Condes or give up 23.45% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	97.41%
Values	Daily Returns

Las Condes  vs.  Enel Amricas SA

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.

Enel Amricas SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Enel Amricas SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical and fundamental indicators, Enel Amricas is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Las Condes and Enel Amricas

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

The idea behind Las Condes and Enel Amricas 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.

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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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.