Correlation Between Enel Chile and Central Puerto

Can any of the company-specific risk be diversified away by investing in both Enel Chile 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 Enel Chile and Central Puerto 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 Central Puerto SA, you can compare the effects of market volatilities on Enel Chile 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 Enel Chile with a short position of Central Puerto. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enel Chile and Central Puerto.

Diversification Opportunities for Enel Chile and Central Puerto

-0.81

Correlation Coefficient

Enel Chile  Central Puerto

Pay attention - limited upside

The 3 months correlation between Enel and Central is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Enel Chile SA 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 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 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 Enel Chile i.e., Enel Chile and Central Puerto go up and down completely randomly.

Pair Corralation between Enel Chile and Central Puerto

Given the investment horizon of 90 days Enel Chile SA is expected to generate 0.47 times more return on investment than Central Puerto. However, Enel Chile SA is 2.13 times less risky than Central Puerto. It trades about 0.17 of its potential returns per unit of risk. Central Puerto SA is currently generating about -0.1 per unit of risk. If you would invest  285.00  in Enel Chile SA on December 28, 2024 and sell it today you would earn a total of  46.00  from holding Enel Chile SA or generate 16.14% return on investment over 90 days.

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

Enel Chile SA  vs.  Central Puerto SA

Enel Chile SA

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Enel Chile SA are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak forward indicators, Enel Chile exhibited solid returns over the last few months and may actually be approaching a breakup point.

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 Enel Chile and Central Puerto

The main advantage of trading using opposite Enel Chile and Central Puerto positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enel Chile 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 Enel Chile SA 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.

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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.