Correlation Between Compania Minera and ENGIE Energia

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

By analyzing existing cross correlation between Compania Minera Poderosa and ENGIE Energia Peru, you can compare the effects of market volatilities on Compania Minera and ENGIE Energia 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 Compania Minera with a short position of ENGIE Energia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compania Minera and ENGIE Energia.

Diversification Opportunities for Compania Minera and ENGIE Energia

0.12

Correlation Coefficient

Compania Minera  ENGIE Energia

Average diversification

The 3 months correlation between Compania and ENGIE is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Compania Minera Poderosa and ENGIE Energia Peru in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ENGIE Energia Peru and Compania Minera 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 Compania Minera Poderosa are associated (or correlated) with ENGIE Energia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ENGIE Energia Peru has no effect on the direction of Compania Minera i.e., Compania Minera and ENGIE Energia go up and down completely randomly.

Pair Corralation between Compania Minera and ENGIE Energia

Assuming the 90 days trading horizon Compania Minera Poderosa is expected to generate 0.96 times more return on investment than ENGIE Energia. However, Compania Minera Poderosa is 1.05 times less risky than ENGIE Energia. It trades about 0.13 of its potential returns per unit of risk. ENGIE Energia Peru is currently generating about 0.08 per unit of risk. If you would invest  800.00  in Compania Minera Poderosa on December 25, 2024 and sell it today you would earn a total of  94.00  from holding Compania Minera Poderosa or generate 11.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	96.67%
Values	Daily Returns

Compania Minera Poderosa  vs.  ENGIE Energia Peru

Compania Minera Poderosa

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Compania Minera Poderosa are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady basic indicators, Compania Minera may actually be approaching a critical reversion point that can send shares even higher in April 2025.

ENGIE Energia Peru

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ENGIE Energia Peru are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating technical and fundamental indicators, ENGIE Energia may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Compania Minera and ENGIE Energia

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

The idea behind Compania Minera Poderosa and ENGIE Energia Peru 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..