Correlation Between Enel Amricas and Sociedad Matriz

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

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

Diversification Opportunities for Enel Amricas and Sociedad Matriz

-0.27

Correlation Coefficient

Enel Amricas  Sociedad Matriz

Very good diversification

The 3 months correlation between Enel and Sociedad is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Enel Amricas SA and Sociedad Matriz SAAM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sociedad Matriz SAAM and Enel Amricas 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 Enel Amricas SA are associated (or correlated) with Sociedad Matriz. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sociedad Matriz SAAM has no effect on the direction of Enel Amricas i.e., Enel Amricas and Sociedad Matriz go up and down completely randomly.

Pair Corralation between Enel Amricas and Sociedad Matriz

Assuming the 90 days trading horizon Enel Amricas SA is expected to under-perform the Sociedad Matriz. But the stock apears to be less risky and, when comparing its historical volatility, Enel Amricas SA is 1.2 times less risky than Sociedad Matriz. The stock trades about -0.06 of its potential returns per unit of risk. The Sociedad Matriz SAAM is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  10,199  in Sociedad Matriz SAAM on September 12, 2024 and sell it today you would lose (128.00) from holding Sociedad Matriz SAAM or give up 1.26% of portfolio value over 90 days.

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

Enel Amricas SA  vs.  Sociedad Matriz SAAM

Enel Amricas SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Enel Amricas SA has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Sociedad Matriz SAAM

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sociedad Matriz SAAM has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Sociedad Matriz is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Enel Amricas and Sociedad Matriz

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

The idea behind Enel Amricas SA and Sociedad Matriz SAAM 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.

Check out your portfolio center.

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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.