Correlation Between Sociedad Matriz and Quinenco

Can any of the company-specific risk be diversified away by investing in both Sociedad Matriz and Quinenco 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 Quinenco 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 Quinenco, you can compare the effects of market volatilities on Sociedad Matriz and Quinenco 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 Quinenco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sociedad Matriz and Quinenco.

Diversification Opportunities for Sociedad Matriz and Quinenco

0.69

Correlation Coefficient

Sociedad Matriz  Quinenco

Poor diversification

The 3 months correlation between Sociedad and Quinenco is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Sociedad Matriz SAAM and Quinenco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quinenco 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 Quinenco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quinenco has no effect on the direction of Sociedad Matriz i.e., Sociedad Matriz and Quinenco go up and down completely randomly.

Pair Corralation between Sociedad Matriz and Quinenco

Assuming the 90 days trading horizon Sociedad Matriz is expected to generate 3.43 times less return on investment than Quinenco. But when comparing it to its historical volatility, Sociedad Matriz SAAM is 1.62 times less risky than Quinenco. It trades about 0.18 of its potential returns per unit of risk. Quinenco is currently generating about 0.38 of returns per unit of risk over similar time horizon. If you would invest  313,900  in Quinenco on October 24, 2024 and sell it today you would earn a total of  21,600  from holding Quinenco or generate 6.88% return on investment over 90 days.

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

Sociedad Matriz SAAM  vs.  Quinenco

Sociedad Matriz SAAM

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sociedad Matriz SAAM are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. 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.

Quinenco

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Quinenco are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Quinenco may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Sociedad Matriz and Quinenco

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

The idea behind Sociedad Matriz SAAM and Quinenco 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.

Check out your portfolio center.

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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.