Correlation Between Colbun and Enel Amricas

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

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

Diversification Opportunities for Colbun and Enel Amricas

-0.2

Correlation Coefficient

Colbun  Enel Amricas

Good diversification

The 3 months correlation between Colbun and Enel is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Colbun and Enel Amricas SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enel Amricas 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 Enel Amricas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enel Amricas SA has no effect on the direction of Colbun i.e., Colbun and Enel Amricas go up and down completely randomly.

Pair Corralation between Colbun and Enel Amricas

Assuming the 90 days trading horizon Colbun is expected to generate 1.26 times more return on investment than Enel Amricas. However, Colbun is 1.26 times more volatile than Enel Amricas SA. It trades about 0.16 of its potential returns per unit of risk. Enel Amricas SA is currently generating about 0.09 per unit of risk. If you would invest  12,080  in Colbun on December 31, 2024 and sell it today you would earn a total of  1,414  from holding Colbun or generate 11.71% return on investment over 90 days.

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

Colbun  vs.  Enel Amricas SA

Colbun

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Colbun are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating essential indicators, Colbun may actually be approaching a critical reversion point that can send shares even higher in May 2025.

Enel Amricas SA

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Enel Amricas SA are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong technical and fundamental indicators, Enel Amricas is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Colbun and Enel Amricas

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

The idea behind Colbun and Enel Amricas 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.