Correlation Between Astar and ENGIE Energia

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

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

Diversification Opportunities for Astar and ENGIE Energia

0.34

Correlation Coefficient

Astar  ENGIE Energia

Weak diversification

The 3 months correlation between Astar and ENGIE is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Astar and ENGIE Energia Peru in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ENGIE Energia Peru and Astar 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 Astar are associated (or correlated) with ENGIE Energia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ENGIE Energia Peru has no effect on the direction of Astar i.e., Astar and ENGIE Energia go up and down completely randomly.

Pair Corralation between Astar and ENGIE Energia

Assuming the 90 days trading horizon Astar is expected to under-perform the ENGIE Energia. In addition to that, Astar is 9.18 times more volatile than ENGIE Energia Peru. It trades about -0.18 of its total potential returns per unit of risk. ENGIE Energia Peru is currently generating about -0.23 per unit of volatility. If you would invest  420.00  in ENGIE Energia Peru on October 12, 2024 and sell it today you would lose (10.00) from holding ENGIE Energia Peru or give up 2.38% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	85.71%
Values	Daily Returns

Astar  vs.  ENGIE Energia Peru

Astar

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Astar are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Astar is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

ENGIE Energia Peru

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ENGIE Energia Peru are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong technical and fundamental indicators, ENGIE Energia is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Astar and ENGIE Energia

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

The idea behind Astar and ENGIE Energia Peru 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.