Correlation Between Pampa Energía and CENTRICA ADR
Can any of the company-specific risk be diversified away by investing in both Pampa Energía and CENTRICA ADR 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 Pampa Energía and CENTRICA ADR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pampa Energa SA and CENTRICA ADR NEW, you can compare the effects of market volatilities on Pampa Energía and CENTRICA ADR 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 Pampa Energía with a short position of CENTRICA ADR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pampa Energía and CENTRICA ADR.
Diversification Opportunities for Pampa Energía and CENTRICA ADR
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Pampa and CENTRICA is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Pampa Energa SA and CENTRICA ADR NEW in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CENTRICA ADR NEW and Pampa Energía 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 Pampa Energa SA are associated (or correlated) with CENTRICA ADR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CENTRICA ADR NEW has no effect on the direction of Pampa Energía i.e., Pampa Energía and CENTRICA ADR go up and down completely randomly.
Pair Corralation between Pampa Energía and CENTRICA ADR
Assuming the 90 days trading horizon Pampa Energa SA is expected to generate 1.29 times more return on investment than CENTRICA ADR. However, Pampa Energía is 1.29 times more volatile than CENTRICA ADR NEW. It trades about 0.1 of its potential returns per unit of risk. CENTRICA ADR NEW is currently generating about 0.05 per unit of risk. If you would invest 2,360 in Pampa Energa SA on September 4, 2024 and sell it today you would earn a total of 5,940 from holding Pampa Energa SA or generate 251.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Pampa Energa SA vs. CENTRICA ADR NEW
Performance |
| Timeline |
| Pampa Energa SA |
| CENTRICA ADR NEW |
Pampa Energía and CENTRICA ADR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pampa Energía and CENTRICA ADR
The main advantage of trading using opposite Pampa Energía and CENTRICA ADR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pampa Energía position performs unexpectedly, CENTRICA ADR 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 CENTRICA ADR will offset losses from the drop in CENTRICA ADR's long position.| Pampa Energía vs. CENTRICA ADR NEW | Pampa Energía vs. Superior Plus Corp | Pampa Energía vs. NMI Holdings | Pampa Energía vs. Origin Agritech |
| CENTRICA ADR vs. SERI INDUSTRIAL EO | CENTRICA ADR vs. GREENX METALS LTD | CENTRICA ADR vs. MeVis Medical Solutions | CENTRICA ADR vs. CompuGroup Medical SE |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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