Correlation Between Enel Chile and Coty

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

Diversification Opportunities for Enel Chile and Coty

-0.44

Correlation Coefficient

Enel Chile  Coty

Very good diversification

The 3 months correlation between Enel and Coty is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Enel Chile SA and Coty Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coty Inc 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 Coty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coty Inc has no effect on the direction of Enel Chile i.e., Enel Chile and Coty go up and down completely randomly.

Pair Corralation between Enel Chile and Coty

Given the investment horizon of 90 days Enel Chile SA is expected to generate 1.02 times more return on investment than Coty. However, Enel Chile is 1.02 times more volatile than Coty Inc. It trades about 0.24 of its potential returns per unit of risk. Coty Inc is currently generating about -0.19 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.  Coty Inc

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.

Coty Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Coty Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Enel Chile and Coty

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

The idea behind Enel Chile SA and Coty Inc 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.