Correlation Between Colbun and Empresas Copec

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

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

Diversification Opportunities for Colbun and Empresas Copec

0.03

Correlation Coefficient

Colbun  Empresas Copec

Significant diversification

The 3 months correlation between Colbun and Empresas is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Colbun 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 Colbun 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 Colbun 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 Colbun i.e., Colbun and Empresas Copec go up and down completely randomly.

Pair Corralation between Colbun and Empresas Copec

Assuming the 90 days trading horizon Colbun is expected to generate 1.81 times less return on investment than Empresas Copec. But when comparing it to its historical volatility, Colbun is 1.62 times less risky than Empresas Copec. It trades about 0.04 of its potential returns per unit of risk. Empresas Copec SA is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  583,122  in Empresas Copec SA on September 12, 2024 and sell it today you would earn a total of  21,028  from holding Empresas Copec SA or generate 3.61% return on investment over 90 days.

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

Colbun  vs.  Empresas Copec SA

Colbun

Risk-Adjusted Performance

3 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Colbun are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong essential indicators, Colbun is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Empresas Copec SA

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Empresas Copec SA are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Empresas Copec is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Colbun and Empresas Copec

The main advantage of trading using opposite Colbun and Empresas Copec positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Colbun 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 Colbun 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.

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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.