Correlation Between Empresa Distribuidora and Central Puerto

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

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

Diversification Opportunities for Empresa Distribuidora and Central Puerto

0.78

Correlation Coefficient

Empresa Distribuidora  Central Puerto

Poor diversification

The 3 months correlation between Empresa and Central is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Empresa Distribuidora y and Central Puerto SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Central Puerto SA and Empresa Distribuidora 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 Empresa Distribuidora y are associated (or correlated) with Central Puerto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Central Puerto SA has no effect on the direction of Empresa Distribuidora i.e., Empresa Distribuidora and Central Puerto go up and down completely randomly.

Pair Corralation between Empresa Distribuidora and Central Puerto

Considering the 90-day investment horizon Empresa Distribuidora y is expected to under-perform the Central Puerto. In addition to that, Empresa Distribuidora is 1.31 times more volatile than Central Puerto SA. It trades about -0.1 of its total potential returns per unit of risk. Central Puerto SA is currently generating about -0.1 per unit of volatility. If you would invest  1,471  in Central Puerto SA on December 29, 2024 and sell it today you would lose (314.00) from holding Central Puerto SA or give up 21.35% of portfolio value over 90 days.

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

Empresa Distribuidora y  vs.  Central Puerto SA

Empresa Distribuidora

Risk-Adjusted Performance

Very Weak

Over the last 90 days Empresa Distribuidora y has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's fundamental indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Central Puerto SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Central Puerto SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Empresa Distribuidora and Central Puerto

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

The idea behind Empresa Distribuidora y and Central Puerto 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..