Correlation Between Catalent and Enel Chile

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

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

Diversification Opportunities for Catalent and Enel Chile

0.25

Correlation Coefficient

Catalent  Enel Chile

Modest diversification

The 3 months correlation between Catalent and Enel is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Catalent and Enel Chile SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enel Chile SA and Catalent 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 Catalent are associated (or correlated) with Enel Chile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enel Chile SA has no effect on the direction of Catalent i.e., Catalent and Enel Chile go up and down completely randomly.

Pair Corralation between Catalent and Enel Chile

Given the investment horizon of 90 days Catalent is expected to generate 0.33 times more return on investment than Enel Chile. However, Catalent is 3.02 times less risky than Enel Chile. It trades about 0.17 of its potential returns per unit of risk. Enel Chile SA is currently generating about 0.01 per unit of risk. If you would invest  5,647  in Catalent on September 22, 2024 and sell it today you would earn a total of  701.00  from holding Catalent or generate 12.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.43%
Values	Daily Returns

Catalent  vs.  Enel Chile SA

Catalent

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Catalent are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable essential indicators, Catalent is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Enel Chile SA

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Enel Chile SA are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak forward indicators, Enel Chile may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Catalent and Enel Chile

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

The idea behind Catalent and Enel Chile 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.