Correlation Between ENCE Energa and Inmobiliaria Colonial

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

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

Diversification Opportunities for ENCE Energa and Inmobiliaria Colonial

0.45

Correlation Coefficient

ENCE Energa  Inmobiliaria Colonial

Very weak diversification

The 3 months correlation between ENCE and Inmobiliaria is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding ENCE Energa y and Inmobiliaria Colonial SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inmobiliaria Colonial and ENCE Energa 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 ENCE Energa y are associated (or correlated) with Inmobiliaria Colonial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inmobiliaria Colonial has no effect on the direction of ENCE Energa i.e., ENCE Energa and Inmobiliaria Colonial go up and down completely randomly.

Pair Corralation between ENCE Energa and Inmobiliaria Colonial

Assuming the 90 days trading horizon ENCE Energa y is expected to generate 0.99 times more return on investment than Inmobiliaria Colonial. However, ENCE Energa y is 1.01 times less risky than Inmobiliaria Colonial. It trades about 0.06 of its potential returns per unit of risk. Inmobiliaria Colonial SA is currently generating about 0.04 per unit of risk. If you would invest  277.00  in ENCE Energa y on December 4, 2024 and sell it today you would earn a total of  63.00  from holding ENCE Energa y or generate 22.74% return on investment over 90 days.

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

ENCE Energa y  vs.  Inmobiliaria Colonial SA

ENCE Energa y

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in ENCE Energa y are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, ENCE Energa exhibited solid returns over the last few months and may actually be approaching a breakup point.

Inmobiliaria Colonial

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Inmobiliaria Colonial SA are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound essential indicators, Inmobiliaria Colonial is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with ENCE Energa and Inmobiliaria Colonial

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

The idea behind ENCE Energa y and Inmobiliaria Colonial 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.