Correlation Between Parq Arauco and Enjoy SA

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

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

Diversification Opportunities for Parq Arauco and Enjoy SA

0.25

Correlation Coefficient

Parq Arauco  Enjoy SA

Modest diversification

The 3 months correlation between Parq and Enjoy is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Parq Arauco and Enjoy SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enjoy SA and Parq Arauco 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 Parq Arauco are associated (or correlated) with Enjoy SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enjoy SA has no effect on the direction of Parq Arauco i.e., Parq Arauco and Enjoy SA go up and down completely randomly.

Pair Corralation between Parq Arauco and Enjoy SA

Assuming the 90 days trading horizon Parq Arauco is expected to generate 0.33 times more return on investment than Enjoy SA. However, Parq Arauco is 3.07 times less risky than Enjoy SA. It trades about 0.03 of its potential returns per unit of risk. Enjoy SA is currently generating about -0.22 per unit of risk. If you would invest  155,850  in Parq Arauco on September 14, 2024 and sell it today you would earn a total of  2,640  from holding Parq Arauco or generate 1.69% return on investment over 90 days.

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

Parq Arauco  vs.  Enjoy SA

Parq Arauco

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Parq Arauco are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Parq Arauco is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Enjoy SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Enjoy SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Parq Arauco and Enjoy SA

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

The idea behind Parq Arauco and Enjoy 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 Global Correlations module to find global opportunities by holding instruments from different markets.