Correlation Between Banco De and Empresas Copec

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

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

Diversification Opportunities for Banco De and Empresas Copec

0.89

Correlation Coefficient

Banco De  Empresas Copec

Very poor diversification

The 3 months correlation between Banco and Empresas is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Banco de Chile and Empresas Copec SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Empresas Copec SA and Banco De 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 Banco de Chile are associated (or correlated) with Empresas Copec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Empresas Copec SA has no effect on the direction of Banco De i.e., Banco De and Empresas Copec go up and down completely randomly.

Pair Corralation between Banco De and Empresas Copec

Assuming the 90 days trading horizon Banco De is expected to generate 1.33 times less return on investment than Empresas Copec. But when comparing it to its historical volatility, Banco de Chile is 1.94 times less risky than Empresas Copec. It trades about 0.3 of its potential returns per unit of risk. Empresas Copec SA is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  598,990  in Empresas Copec SA on December 2, 2024 and sell it today you would earn a total of  78,010  from holding Empresas Copec SA or generate 13.02% return on investment over 90 days.

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

Banco de Chile  vs.  Empresas Copec SA

Banco de Chile

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Banco de Chile are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Banco De may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Empresas Copec SA

Risk-Adjusted Performance

OK

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

Pair Trading with Banco De and Empresas Copec

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

The idea behind Banco de Chile and Empresas Copec SA 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.