Correlation Between Ocean Biomedical and Enel Chile

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

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

Diversification Opportunities for Ocean Biomedical and Enel Chile

-0.55

Correlation Coefficient

Ocean Biomedical  Enel Chile

Excellent diversification

The 3 months correlation between Ocean and Enel is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Ocean Biomedical and Enel Chile SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enel Chile SA and Ocean Biomedical 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 Ocean Biomedical are associated (or correlated) with Enel Chile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enel Chile SA has no effect on the direction of Ocean Biomedical i.e., Ocean Biomedical and Enel Chile go up and down completely randomly.

Pair Corralation between Ocean Biomedical and Enel Chile

Assuming the 90 days horizon Ocean Biomedical is expected to generate 9.28 times more return on investment than Enel Chile. However, Ocean Biomedical is 9.28 times more volatile than Enel Chile SA. It trades about 0.05 of its potential returns per unit of risk. Enel Chile SA is currently generating about 0.06 per unit of risk. If you would invest  3.00  in Ocean Biomedical on October 24, 2024 and sell it today you would lose (0.10) from holding Ocean Biomedical or give up 3.33% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Ocean Biomedical  vs.  Enel Chile SA

Ocean Biomedical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ocean Biomedical has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Enel Chile SA

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Enel Chile SA are ranked lower than 5 (%) 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.

Pair Trading with Ocean Biomedical and Enel Chile

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

The idea behind Ocean Biomedical and Enel Chile SA 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 Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.