Correlation Between Sociedad Minera and ENGIE Energia

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

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

Diversification Opportunities for Sociedad Minera and ENGIE Energia

-0.52

Correlation Coefficient

Sociedad Minera  ENGIE Energia

Excellent diversification

The 3 months correlation between Sociedad and ENGIE is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Sociedad Minera el 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 Sociedad Minera 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 Sociedad Minera el 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 Sociedad Minera i.e., Sociedad Minera and ENGIE Energia go up and down completely randomly.

Pair Corralation between Sociedad Minera and ENGIE Energia

Assuming the 90 days trading horizon Sociedad Minera el is expected to under-perform the ENGIE Energia. In addition to that, Sociedad Minera is 1.1 times more volatile than ENGIE Energia Peru. It trades about -0.22 of its total potential returns per unit of risk. ENGIE Energia Peru is currently generating about 0.09 per unit of volatility. If you would invest  410.00  in ENGIE Energia Peru on December 26, 2024 and sell it today you would earn a total of  31.00  from holding ENGIE Energia Peru or generate 7.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	44.07%
Values	Daily Returns

Sociedad Minera el  vs.  ENGIE Energia Peru

Sociedad Minera el

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sociedad Minera el has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's essential indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

ENGIE Energia Peru

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ENGIE Energia Peru are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating technical and fundamental indicators, ENGIE Energia may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Sociedad Minera and ENGIE Energia

The main advantage of trading using opposite Sociedad Minera and ENGIE Energia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sociedad Minera 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 Sociedad Minera el 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.

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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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.