Correlation Between Quinenco and Empresas Copec

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

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

Diversification Opportunities for Quinenco and Empresas Copec

0.32

Correlation Coefficient

Quinenco  Empresas Copec

Weak diversification

The 3 months correlation between Quinenco and Empresas is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Quinenco and Empresas Copec SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Empresas Copec SA and Quinenco 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 Quinenco are associated (or correlated) with Empresas Copec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Empresas Copec SA has no effect on the direction of Quinenco i.e., Quinenco and Empresas Copec go up and down completely randomly.

Pair Corralation between Quinenco and Empresas Copec

Assuming the 90 days trading horizon Quinenco is expected to generate 1.05 times more return on investment than Empresas Copec. However, Quinenco is 1.05 times more volatile than Empresas Copec SA. It trades about 0.05 of its potential returns per unit of risk. Empresas Copec SA is currently generating about 0.02 per unit of risk. If you would invest  223,164  in Quinenco on September 4, 2024 and sell it today you would earn a total of  86,836  from holding Quinenco or generate 38.91% return on investment over 90 days.

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

Quinenco  vs.  Empresas Copec SA

Quinenco

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Quinenco has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Quinenco is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Empresas Copec SA

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Empresas Copec SA are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Empresas Copec is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Quinenco and Empresas Copec

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

The idea behind Quinenco and Empresas Copec 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.