Correlation Between Enel Chile and El Puerto

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

Diversification Opportunities for Enel Chile and El Puerto

-0.15

Correlation Coefficient

Enel Chile  El Puerto

Good diversification

The 3 months correlation between Enel and ELPQF is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Enel Chile SA and El Puerto de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on El Puerto de 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 El Puerto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of El Puerto de has no effect on the direction of Enel Chile i.e., Enel Chile and El Puerto go up and down completely randomly.

Pair Corralation between Enel Chile and El Puerto

Given the investment horizon of 90 days Enel Chile SA is expected to generate 1.26 times more return on investment than El Puerto. However, Enel Chile is 1.26 times more volatile than El Puerto de. It trades about 0.12 of its potential returns per unit of risk. El Puerto de is currently generating about -0.04 per unit of risk. If you would invest  276.00  in Enel Chile SA on October 10, 2024 and sell it today you would earn a total of  12.00  from holding Enel Chile SA or generate 4.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Enel Chile SA  vs.  El Puerto de

Enel Chile SA

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Enel Chile SA are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak forward indicators, Enel Chile may actually be approaching a critical reversion point that can send shares even higher in February 2025.

El Puerto de

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days El Puerto de has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Enel Chile and El Puerto

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

The idea behind Enel Chile SA and El Puerto de 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.