Correlation Between Sociedad and Parq Arauco

Can any of the company-specific risk be diversified away by investing in both Sociedad and Parq Arauco 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 Parq Arauco 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 Parq Arauco, you can compare the effects of market volatilities on Sociedad and Parq Arauco 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 Parq Arauco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sociedad and Parq Arauco.

Diversification Opportunities for Sociedad and Parq Arauco

0.0

Correlation Coefficient

Sociedad  Parq Arauco

Pay attention - limited upside

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

Pair Corralation between Sociedad and Parq Arauco

If you would invest  157,000  in Parq Arauco on December 2, 2024 and sell it today you would earn a total of  16,020  from holding Parq Arauco or generate 10.2% 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.  Parq Arauco

Sociedad De Inversiones

Risk-Adjusted Performance

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 recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Parq Arauco

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Parq Arauco are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting basic indicators, Parq Arauco may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Sociedad and Parq Arauco

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

The idea behind Sociedad De Inversiones and Parq Arauco 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.