Correlation Between Multiexport Foods and Enel Generacin

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

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

Diversification Opportunities for Multiexport Foods and Enel Generacin

0.95

Correlation Coefficient

Multiexport Foods  Enel Generacin

Almost no diversification

The 3 months correlation between Multiexport and Enel is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Multiexport Foods SA and Enel Generacin Chile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enel Generacin Chile and Multiexport Foods 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 Multiexport Foods SA are associated (or correlated) with Enel Generacin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enel Generacin Chile has no effect on the direction of Multiexport Foods i.e., Multiexport Foods and Enel Generacin go up and down completely randomly.

Pair Corralation between Multiexport Foods and Enel Generacin

Assuming the 90 days trading horizon Multiexport Foods SA is expected to generate 1.13 times more return on investment than Enel Generacin. However, Multiexport Foods is 1.13 times more volatile than Enel Generacin Chile. It trades about 0.38 of its potential returns per unit of risk. Enel Generacin Chile is currently generating about 0.29 per unit of risk. If you would invest  20,397  in Multiexport Foods SA on December 2, 2024 and sell it today you would earn a total of  4,548  from holding Multiexport Foods SA or generate 22.3% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	77.78%
Values	Daily Returns

Multiexport Foods SA  vs.  Enel Generacin Chile

Multiexport Foods

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Multiexport Foods SA are ranked lower than 29 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating essential indicators, Multiexport Foods sustained solid returns over the last few months and may actually be approaching a breakup point.

Enel Generacin Chile

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Enel Generacin Chile are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical and fundamental indicators, Enel Generacin exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Multiexport Foods and Enel Generacin

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

The idea behind Multiexport Foods SA and Enel Generacin Chile 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..