Correlation Between Enel Chile and Aterian

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

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

Diversification Opportunities for Enel Chile and Aterian

-0.48

Correlation Coefficient

Enel Chile  Aterian

Very good diversification

The 3 months correlation between Enel and Aterian is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Enel Chile SA and Aterian in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aterian and Enel Chile 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 Chile SA are associated (or correlated) with Aterian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aterian has no effect on the direction of Enel Chile i.e., Enel Chile and Aterian go up and down completely randomly.

Pair Corralation between Enel Chile and Aterian

Given the investment horizon of 90 days Enel Chile SA is expected to generate 0.7 times more return on investment than Aterian. However, Enel Chile SA is 1.43 times less risky than Aterian. It trades about 0.24 of its potential returns per unit of risk. Aterian is currently generating about -0.3 per unit of risk. If you would invest  271.00  in Enel Chile SA on September 24, 2024 and sell it today you would earn a total of  23.00  from holding Enel Chile SA or generate 8.49% return on investment over 90 days.

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

Enel Chile SA  vs.  Aterian

Enel Chile SA

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Enel Chile SA are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady forward indicators, Enel Chile may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Aterian

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aterian has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's technical and fundamental indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Enel Chile and Aterian

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

The idea behind Enel Chile SA and Aterian 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.