ISA: HISTORICAL RETURN (96% CORRELATION) AND DEFENSIVE RISK (BETA 0.36) FOR THE LONG-TERM PORTFOLIO.

 

The analysis of Interconexión Eléctrica (ISA) stock price, from the start of the study (November 4, 2010) at 12,960 to the final price of 25,880, shows a significant positive return over the period, as corroborated by the price chart.

The profitability chart is key to understanding the trend.

The linear model (green line) shows a coefficient of determination (R²) of 0.534. This indicates that the linear model explains approximately 53.4% ​​of the price variability, suggesting a moderate and increasing relationship in the long term. The regression equation is: Y = 3.2795x + 8149.

The correlation table indicates that polynomial regressions are better, with a 6th-order polynomial correlation of 96.00% and a 3rd-order polynomial correlation of 88.71%.

The 96.00% correlation for the 6th order (green line) demonstrates that this model fits the historical price trajectory very closely. This model better captures the upward and downward cycles (peaks and troughs) that are not linear.

The fact that the 6th-order polynomial correlation is much higher than the linear and 3rd-order correlations indicates that the price evolution of ISA is not simply a straight upward line, but is defined by multiple cycles and phases (an upward trend with intermediate corrections). Polynomial models, although good at describing the Past performance data should be used with caution for very long-term future projections.

The descriptive statistics table provides a solid diagnosis of the stock price distribution.

Skewness and kurtosis analysis is fundamental in finance for understanding tail risk.

The skewness of 0.8403 is positive, indicating a significant difference between the mean (14.472), median (13.060), and mode (12.960). Since the mean is greater than the median and the mode, the price distribution is positively skewed, or skewed to the right.

This means the distribution has a longer right tail. There are more days of low prices (concentration near the mode and median), but gains are driven by a few days of exceptionally high prices (the right tail). The average price (mean) is "pulled" upward by these outliers (peaks). The histogram corroborates this by showing a higher frequency in the lower class intervals. High, positive kurtosis (leptokurtic) means the distribution has heavier tails (a higher probability of extreme events) and a sharper peak than a normal distribution. In finance, this means a greater risk of extreme losses or gains. Negative kurtosis (platykurtic), as in this case (−0.393), means the distribution is flatter and has thinner tails than a normal distribution. The negative kurtosis of ISA suggests that prices have a more dispersed variance, and extremely high or low price events are less likely than in a normal distribution.

This may indicate a lower probability of major crashes (Black Swan Events) compared to a highly leptokurtic asset, resulting in less tail risk for the investor.

 If the distribution were normal, the histogram would resemble a symmetrical Gaussian bell curve. However, the ISA histogram shows a higher concentration of data in the lower class intervals (left), with a "tail" extending to the right (upper intervals). This corroborates the positive skew (0.8403) and the lack of normality.

The price has risen from $12,960 to $25,880, and the 6th-order polynomial model with a 96% correlation confirms a solid trajectory. A standard deviation of 4.995 indicates the level of fluctuation, and an average monthly return of 0.36% represents a consistently positive return. Negative kurtosis implies that the risk of extreme price events (massive losses) is statistically lower than in an asset with a leptokurtic distribution.

Positive skewness indicates that, while the overall trend is positive, prices mostly remain at lower levels (close to the mode), and large price jumps are less frequent.

Yes, from the statistical and econometric perspective of the data presented, it is worth investing now. The analysis shows an asset with a strong growth track record (96% correlation) and a positive return trajectory (0.36% average monthly return). Although the distribution is not normal and is skewed, the tail risk is low (negative kurtosis), suggesting that the risk profile is manageable and large, and extreme losses are less likely.

The 90- and 180-day forecasts (21,083 and 21,381) are positive, although they are below the current price (25,880), which could indicate an expected correction or that the model used for the projection is not the most robust for the short term. The decision is based more on the long-term trend and the stable risk profile.

The technical analysis uses indicators and oscillators to measure the strength and direction of price movements. The moving average (MA) result is extremely bullish: 12 Buy signals and 0 Sell signals.

The fact that the current stock price (approximately 25,880 according to the chart) is above all the Moving Averages (both simple and exponential), from the 5-period MA (short-term) to the 200-period MA (long-term), indicates a very strong and well-established upward trend across all time horizons. This reinforces the positive trajectory diagnosis shown by the polynomial statistical analysis. The indicators show a clear buying intent (9), but three key indicators are warning of overbought conditions and, therefore, caution. Trend indicators (MACD, ADX) and momentum indicators (Ultimate Oscillator, ROC) suggest that current buying pressure is dominant.

Range oscillators such as the Stochastic Oscillator (STOCH) and Williams %R are in overbought territory. This means that the price has risen very rapidly in the short term, and a correction or sideways movement (a pause in the upward trend) is statistically likely in the immediate future. This is the main "Uncertainty" or "Caution" factor mentioned.

The fact that the cumulative probability has reached 98.88% implies that the current price is in the upper right tail of the historical price distribution.

This is directly related to the positive skew (0.8403) and the low median/mode of the statistical analysis. Most of the data is concentrated at low prices, which places the current price (25,880) in a very low historical probability range.

Being in the tail of the distribution is a statistically unusual or extreme position. The price is at an excellent level (good action), but the probability of it continuing to rise without a correction is drastically reduced. This reinforces the overbought signal from the technical oscillators.

Pivot points are key support (S) and resistance (R) levels used to plan short-term entries and exits.

The pivot point (PP) at 25,840 acts as a key breakeven point. Given that the current price is slightly above this target price, the S1 (Support) level in the 25,400-25,587.9 range is the first level where the price could bounce if it initiates a correction.

Expanding the technical analysis does not invalidate the investment recommendation, but rather contextualizes it and adds a layer of temporary caution.

The stock is a "Strong Buy" based on the historical trend and the consolidation of the moving averages. It is a quality asset (good returns and low tail risk). The overbought signal and the accumulated probability at an extreme level indicate that this is not the optimal time for a buyImmediate and massive entry. There is a high probability of a small price correction in the short term.

A Stepped Entry strategy (Dollar-Cost Averaging or DCA) is recommended. Instead of investing all capital immediately, consider making a moderate initial entry to capitalize on the trend, reserving capital for additional entries if the price corrects towards the S1 (25,400) or S2 support levels.

Fundamental analysis evaluates the company's intrinsic value based on its financial metrics. By integrating the three pillars of analysis, a robust and nuanced conclusion is reached. The 0.36 Beta (fundamental) directly confirms the platykurtosis (low tail risk) of the statistical analysis. ISA is a defensive stock that tends to fall less than the market during recessions and is ideal for preserving capital.

The high standard deviation and ATR are justified by the 57.7% growth over one year, which is an upward price movement and not uncontrolled volatility. Profitability (margin 49.7%, ROE 13.7%) and valuation (P/E ratio 11.8x) are solid and fair. The econometric analysis (96% polynomial correlation) and the technical analysis (12/12, buy moving averages) confirm that the stock's upward momentum is supported by the strength of the business.

The three overbought indicators and the 98.88% cumulative probability are the only warning signs. This does not call into question the quality of the company, but rather the timing of the entry. It indicates that, in the coming days or weeks, the price could correct or pause before continuing its upward trend.

Yes, it's worth investing in Interconexión Eléctrica (ISA) right now because the fundamental risk (Beta 0.36) and statistical tail risk are low, while the quality, profitability, and long-term trend are exceptionally strong.

However, to mitigate the short-term risk of the overbought technical signal, it's important to understand that ISA is a long-term asset, a defensive pillar with an attractive dividend, ideal for any portfolio seeking stability and consistent growth.