Correlation Between Sociedad and Enel Generacin

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

By analyzing existing cross correlation between Sociedad De Inversiones and Enel Generacin Chile, you can compare the effects of market volatilities on Sociedad and Enel Generacin 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 with a short position of Enel Generacin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sociedad and Enel Generacin.

Diversification Opportunities for Sociedad and Enel Generacin

0.0

Correlation Coefficient

Sociedad  Enel Generacin

Pay attention - limited upside

The 3 months correlation between Sociedad and Enel is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Sociedad De Inversiones and Enel Generacin Chile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enel Generacin Chile and Sociedad 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 De Inversiones are associated (or correlated) with Enel Generacin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enel Generacin Chile has no effect on the direction of Sociedad i.e., Sociedad and Enel Generacin go up and down completely randomly.

Pair Corralation between Sociedad and Enel Generacin

If you would invest  33,000  in Enel Generacin Chile on September 13, 2024 and sell it today you would earn a total of  4,497  from holding Enel Generacin Chile or generate 13.63% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Sociedad De Inversiones  vs.  Enel Generacin Chile

Sociedad De Inversiones

Risk-Adjusted Performance

0 of 100

Very Weak

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

Enel Generacin Chile

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Enel Generacin Chile are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical and fundamental indicators, Enel Generacin exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sociedad and Enel Generacin

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

The idea behind Sociedad De Inversiones and Enel Generacin Chile 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.