Correlation Between Empresas Copec and Banco De

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

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

Diversification Opportunities for Empresas Copec and Banco De

0.72

Correlation Coefficient

Empresas Copec  Banco De

Poor diversification

The 3 months correlation between Empresas and Banco is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Empresas Copec SA and Banco de Chile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banco de Chile and Empresas Copec 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 Empresas Copec SA are associated (or correlated) with Banco De. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Banco de Chile has no effect on the direction of Empresas Copec i.e., Empresas Copec and Banco De go up and down completely randomly.

Pair Corralation between Empresas Copec and Banco De

Assuming the 90 days trading horizon Empresas Copec is expected to generate 1.95 times less return on investment than Banco De. In addition to that, Empresas Copec is 2.04 times more volatile than Banco de Chile. It trades about 0.1 of its total potential returns per unit of risk. Banco de Chile is currently generating about 0.41 per unit of volatility. If you would invest  10,472  in Banco de Chile on December 29, 2024 and sell it today you would earn a total of  2,129  from holding Banco de Chile or generate 20.33% return on investment over 90 days.

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

Empresas Copec SA  vs.  Banco de Chile

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 8 (%) 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.

Banco de Chile

Risk-Adjusted Performance

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Banco de Chile are ranked lower than 32 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Banco De unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Empresas Copec and Banco De

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

The idea behind Empresas Copec SA and Banco de Chile 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.