Correlation Between ENGIE Energia and Compania Minera

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

By analyzing existing cross correlation between ENGIE Energia Peru and Compania Minera Poderosa, you can compare the effects of market volatilities on ENGIE Energia and Compania Minera 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 ENGIE Energia with a short position of Compania Minera. Check out your portfolio center. Please also check ongoing floating volatility patterns of ENGIE Energia and Compania Minera.

Diversification Opportunities for ENGIE Energia and Compania Minera

0.12

Correlation Coefficient

ENGIE Energia  Compania Minera

Average diversification

The 3 months correlation between ENGIE and Compania is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding ENGIE Energia Peru and Compania Minera Poderosa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compania Minera Poderosa and ENGIE Energia 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 ENGIE Energia Peru are associated (or correlated) with Compania Minera. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compania Minera Poderosa has no effect on the direction of ENGIE Energia i.e., ENGIE Energia and Compania Minera go up and down completely randomly.

Pair Corralation between ENGIE Energia and Compania Minera

Assuming the 90 days trading horizon ENGIE Energia is expected to generate 1.51 times less return on investment than Compania Minera. In addition to that, ENGIE Energia is 1.05 times more volatile than Compania Minera Poderosa. It trades about 0.08 of its total potential returns per unit of risk. Compania Minera Poderosa is currently generating about 0.13 per unit of volatility. If you would invest  800.00  in Compania Minera Poderosa on December 25, 2024 and sell it today you would earn a total of  94.00  from holding Compania Minera Poderosa or generate 11.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	96.67%
Values	Daily Returns

ENGIE Energia Peru  vs.  Compania Minera Poderosa

ENGIE Energia Peru

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ENGIE Energia Peru are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating technical and fundamental indicators, ENGIE Energia may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Compania Minera Poderosa

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Compania Minera Poderosa are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady basic indicators, Compania Minera may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with ENGIE Energia and Compania Minera

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

The idea behind ENGIE Energia Peru and Compania Minera Poderosa 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.