Correlation Between Cencosud and Fondo De

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Can any of the company-specific risk be diversified away by investing in both Cencosud and Fondo De 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 Cencosud and Fondo De into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cencosud and Fondo de Inversion, you can compare the effects of market volatilities on Cencosud and Fondo De 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 Cencosud with a short position of Fondo De. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cencosud and Fondo De.

Diversification Opportunities for Cencosud and Fondo De

-0.39
  Correlation Coefficient

Very good diversification

The 3 months correlation between Cencosud and Fondo is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Cencosud and Fondo de Inversion in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fondo de Inversion and Cencosud 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 Cencosud are associated (or correlated) with Fondo De. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fondo de Inversion has no effect on the direction of Cencosud i.e., Cencosud and Fondo De go up and down completely randomly.

Pair Corralation between Cencosud and Fondo De

Assuming the 90 days trading horizon Cencosud is expected to generate 2.3 times more return on investment than Fondo De. However, Cencosud is 2.3 times more volatile than Fondo de Inversion. It trades about 0.08 of its potential returns per unit of risk. Fondo de Inversion is currently generating about 0.01 per unit of risk. If you would invest  190,000  in Cencosud on August 16, 2024 and sell it today you would earn a total of  3,900  from holding Cencosud or generate 2.05% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Cencosud  vs.  Fondo de Inversion

 Performance 
       Timeline  
Cencosud 

Risk-Adjusted Performance

9 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Cencosud are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Cencosud may actually be approaching a critical reversion point that can send shares even higher in December 2024.
Fondo de Inversion 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Fondo de Inversion has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Fondo De is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Cencosud and Fondo De Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Cencosud and Fondo De

The main advantage of trading using opposite Cencosud and Fondo De positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cencosud position performs unexpectedly, Fondo De 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 Fondo De will offset losses from the drop in Fondo De's long position.
The idea behind Cencosud and Fondo de Inversion 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.

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