Correlation Between Enel Chile and PNM Old

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

Diversification Opportunities for Enel Chile and PNM Old

0.0

Correlation Coefficient

Enel Chile  PNM Old

Pay attention - limited upside

The 3 months correlation between Enel and PNM is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Enel Chile SA and PNM Old in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PNM Old 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 PNM Old. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PNM Old has no effect on the direction of Enel Chile i.e., Enel Chile and PNM Old go up and down completely randomly.

Pair Corralation between Enel Chile and PNM Old

If you would invest  191.00  in Enel Chile SA on November 20, 2024 and sell it today you would earn a total of  149.00  from holding Enel Chile SA or generate 78.01% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Enel Chile SA  vs.  PNM Old

Enel Chile SA

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Enel Chile SA are ranked lower than 17 (%) 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.

PNM Old

Risk-Adjusted Performance

Very Weak

Over the last 90 days PNM Old has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, PNM Old is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Enel Chile and PNM Old

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

The idea behind Enel Chile SA and PNM Old 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.