Correlation Between CAP SA and Empresa Nacional

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

By analyzing existing cross correlation between CAP SA and Empresa Nacional de, you can compare the effects of market volatilities on CAP SA and Empresa Nacional 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 CAP SA with a short position of Empresa Nacional. Check out your portfolio center. Please also check ongoing floating volatility patterns of CAP SA and Empresa Nacional.

Diversification Opportunities for CAP SA and Empresa Nacional

0.43

Correlation Coefficient

CAP SA  Empresa Nacional

Very weak diversification

The 3 months correlation between CAP and Empresa is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding CAP SA and Empresa Nacional de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Empresa Nacional and CAP SA 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 CAP SA are associated (or correlated) with Empresa Nacional. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Empresa Nacional has no effect on the direction of CAP SA i.e., CAP SA and Empresa Nacional go up and down completely randomly.

Pair Corralation between CAP SA and Empresa Nacional

Assuming the 90 days trading horizon CAP SA is expected to generate 1.16 times less return on investment than Empresa Nacional. In addition to that, CAP SA is 1.44 times more volatile than Empresa Nacional de. It trades about 0.04 of its total potential returns per unit of risk. Empresa Nacional de is currently generating about 0.06 per unit of volatility. If you would invest  283,000  in Empresa Nacional de on September 4, 2024 and sell it today you would earn a total of  13,670  from holding Empresa Nacional de or generate 4.83% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

CAP SA  vs.  Empresa Nacional de

CAP SA

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CAP SA are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, CAP SA is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Empresa Nacional

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Empresa Nacional de are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Empresa Nacional is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with CAP SA and Empresa Nacional

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

The idea behind CAP SA and Empresa Nacional de 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.