Correlation Between Inmobiliaria Colonial and Grupo Ecoener

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

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

Diversification Opportunities for Inmobiliaria Colonial and Grupo Ecoener

0.43

Correlation Coefficient

Inmobiliaria Colonial  Grupo Ecoener

Very weak diversification

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

Pair Corralation between Inmobiliaria Colonial and Grupo Ecoener

Assuming the 90 days trading horizon Inmobiliaria Colonial is expected to generate 9.29 times less return on investment than Grupo Ecoener. In addition to that, Inmobiliaria Colonial is 1.02 times more volatile than Grupo Ecoener SA. It trades about 0.02 of its total potential returns per unit of risk. Grupo Ecoener SA is currently generating about 0.17 per unit of volatility. If you would invest  434.00  in Grupo Ecoener SA on November 28, 2024 and sell it today you would earn a total of  61.00  from holding Grupo Ecoener SA or generate 14.06% return on investment over 90 days.

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

Inmobiliaria Colonial SA  vs.  Grupo Ecoener SA

Inmobiliaria Colonial

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Inmobiliaria Colonial SA are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound essential indicators, Inmobiliaria Colonial is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Grupo Ecoener SA

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Grupo Ecoener SA are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Grupo Ecoener exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Inmobiliaria Colonial and Grupo Ecoener

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

The idea behind Inmobiliaria Colonial SA and Grupo Ecoener 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.