Correlation Between Sociedad Matriz and Parq Arauco

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

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

Diversification Opportunities for Sociedad Matriz and Parq Arauco

-0.34

Correlation Coefficient

Sociedad Matriz  Parq Arauco

Very good diversification

The 3 months correlation between Sociedad and Parq is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Sociedad Matriz SAAM and Parq Arauco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Parq Arauco and Sociedad Matriz 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 Sociedad Matriz SAAM are associated (or correlated) with Parq Arauco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Parq Arauco has no effect on the direction of Sociedad Matriz i.e., Sociedad Matriz and Parq Arauco go up and down completely randomly.

Pair Corralation between Sociedad Matriz and Parq Arauco

Assuming the 90 days trading horizon Sociedad Matriz SAAM is expected to under-perform the Parq Arauco. In addition to that, Sociedad Matriz is 1.04 times more volatile than Parq Arauco. It trades about -0.02 of its total potential returns per unit of risk. Parq Arauco is currently generating about 0.02 per unit of volatility. If you would invest  155,000  in Parq Arauco on September 13, 2024 and sell it today you would earn a total of  1,480  from holding Parq Arauco or generate 0.95% return on investment over 90 days.

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

Sociedad Matriz SAAM  vs.  Parq Arauco

Sociedad Matriz SAAM

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sociedad Matriz SAAM has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Sociedad Matriz is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Parq Arauco

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Parq Arauco are ranked lower than 1 (%) 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.

Pair Trading with Sociedad Matriz and Parq Arauco

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

The idea behind Sociedad Matriz SAAM and Parq Arauco 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..