Correlation Between CAP SA and Quinenco

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

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

Diversification Opportunities for CAP SA and Quinenco

-0.47

Correlation Coefficient

CAP SA  Quinenco

Very good diversification

The 3 months correlation between CAP and Quinenco is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding CAP SA and Quinenco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quinenco 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 Quinenco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quinenco has no effect on the direction of CAP SA i.e., CAP SA and Quinenco go up and down completely randomly.

Pair Corralation between CAP SA and Quinenco

Assuming the 90 days trading horizon CAP SA is expected to generate 1.72 times less return on investment than Quinenco. But when comparing it to its historical volatility, CAP SA is 1.03 times less risky than Quinenco. It trades about 0.22 of its potential returns per unit of risk. Quinenco is currently generating about 0.37 of returns per unit of risk over similar time horizon. If you would invest  316,990  in Quinenco on October 25, 2024 and sell it today you would earn a total of  21,010  from holding Quinenco or generate 6.63% return on investment over 90 days.

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

CAP SA  vs.  Quinenco

CAP SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CAP SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Quinenco

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Quinenco are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Quinenco may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with CAP SA and Quinenco

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

The idea behind CAP SA and Quinenco 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.