Correlation Between Nitratos and Las Condes

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

By analyzing existing cross correlation between Nitratos de Chile and Las Condes, you can compare the effects of market volatilities on Nitratos and Las Condes 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 Nitratos with a short position of Las Condes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nitratos and Las Condes.

Diversification Opportunities for Nitratos and Las Condes

-0.35

Correlation Coefficient

Nitratos  Las Condes

Very good diversification

The 3 months correlation between Nitratos and Las is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Nitratos de Chile and Las Condes in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Las Condes and Nitratos 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 Nitratos de Chile are associated (or correlated) with Las Condes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Las Condes has no effect on the direction of Nitratos i.e., Nitratos and Las Condes go up and down completely randomly.

Pair Corralation between Nitratos and Las Condes

Assuming the 90 days trading horizon Nitratos de Chile is expected to under-perform the Las Condes. But the stock apears to be less risky and, when comparing its historical volatility, Nitratos de Chile is 3.14 times less risky than Las Condes. The stock trades about -0.12 of its potential returns per unit of risk. The Las Condes is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  1,120,300  in Las Condes on December 3, 2024 and sell it today you would earn a total of  159,700  from holding Las Condes or generate 14.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Nitratos de Chile  vs.  Las Condes

Nitratos de Chile

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nitratos de Chile has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Las Condes

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Las Condes are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Las Condes exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nitratos and Las Condes

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

The idea behind Nitratos de Chile and Las Condes 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.