Correlation Between Las Condes and Sociedad Qumica

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

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

Diversification Opportunities for Las Condes and Sociedad Qumica

-0.54

Correlation Coefficient

Las Condes  Sociedad Qumica

Excellent diversification

The 3 months correlation between Las and Sociedad is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Las Condes and Sociedad Qumica y in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sociedad Qumica y 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 Sociedad Qumica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sociedad Qumica y has no effect on the direction of Las Condes i.e., Las Condes and Sociedad Qumica go up and down completely randomly.

Pair Corralation between Las Condes and Sociedad Qumica

Assuming the 90 days trading horizon Las Condes is expected to generate 1.33 times more return on investment than Sociedad Qumica. However, Las Condes is 1.33 times more volatile than Sociedad Qumica y. It trades about 0.0 of its potential returns per unit of risk. Sociedad Qumica y is currently generating about -0.03 per unit of risk. If you would invest  1,192,402  in Las Condes on August 31, 2024 and sell it today you would lose (200,082) from holding Las Condes or give up 16.78% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.95%
Values	Daily Returns

Las Condes  vs.  Sociedad Qumica y

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 weak performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in December 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Sociedad Qumica y

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sociedad Qumica y are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Sociedad Qumica is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Las Condes and Sociedad Qumica

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

The idea behind Las Condes and Sociedad Qumica y 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.