Correlation Between Light SA and Empresa Metropolitana

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

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

Diversification Opportunities for Light SA and Empresa Metropolitana

-0.59

Correlation Coefficient

Light SA  Empresa Metropolitana

Excellent diversification

The 3 months correlation between Light and Empresa is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Light SA and Empresa Metropolitana de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Empresa Metropolitana and Light SA 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 Light SA are associated (or correlated) with Empresa Metropolitana. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Empresa Metropolitana has no effect on the direction of Light SA i.e., Light SA and Empresa Metropolitana go up and down completely randomly.

Pair Corralation between Light SA and Empresa Metropolitana

Assuming the 90 days trading horizon Light SA is expected to generate 3.26 times more return on investment than Empresa Metropolitana. However, Light SA is 3.26 times more volatile than Empresa Metropolitana de. It trades about 0.21 of its potential returns per unit of risk. Empresa Metropolitana de is currently generating about -0.23 per unit of risk. If you would invest  415.00  in Light SA on March 19, 2025 and sell it today you would earn a total of  315.00  from holding Light SA or generate 75.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.39%
Values	Daily Returns

Light SA  vs.  Empresa Metropolitana de

Light SA

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Light SA are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Light SA unveiled solid returns over the last few months and may actually be approaching a breakup point.

Empresa Metropolitana

Risk-Adjusted Performance

Very Weak

Over the last 90 days Empresa Metropolitana de has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Preferred Stock's basic indicators remain comparatively stable which may send shares a bit higher in July 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Light SA and Empresa Metropolitana

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

The idea behind Light SA and Empresa Metropolitana de 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.