Correlation Between Agrometal SAI and Metrogas
Can any of the company-specific risk be diversified away by investing in both Agrometal SAI and Metrogas 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 Agrometal SAI and Metrogas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Agrometal SAI and Metrogas SA, you can compare the effects of market volatilities on Agrometal SAI and Metrogas 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 Agrometal SAI with a short position of Metrogas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Agrometal SAI and Metrogas.
Diversification Opportunities for Agrometal SAI and Metrogas
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Agrometal and Metrogas is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Agrometal SAI and Metrogas SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metrogas SA and Agrometal SAI 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 Agrometal SAI are associated (or correlated) with Metrogas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metrogas SA has no effect on the direction of Agrometal SAI i.e., Agrometal SAI and Metrogas go up and down completely randomly.
Pair Corralation between Agrometal SAI and Metrogas
Assuming the 90 days trading horizon Agrometal SAI is expected to generate 1.92 times less return on investment than Metrogas. In addition to that, Agrometal SAI is 1.34 times more volatile than Metrogas SA. It trades about 0.07 of its total potential returns per unit of risk. Metrogas SA is currently generating about 0.17 per unit of volatility. If you would invest 8,720 in Metrogas SA on August 27, 2024 and sell it today you would earn a total of 207,780 from holding Metrogas SA or generate 2382.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Agrometal SAI vs. Metrogas SA
Performance |
| Timeline |
| Agrometal SAI |
| Metrogas SA |
Agrometal SAI and Metrogas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Agrometal SAI and Metrogas
The main advantage of trading using opposite Agrometal SAI and Metrogas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Agrometal SAI position performs unexpectedly, Metrogas 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 Metrogas will offset losses from the drop in Metrogas' long position.| Agrometal SAI vs. Harmony Gold Mining | Agrometal SAI vs. United States Steel | Agrometal SAI vs. Compania de Transporte |
| Metrogas vs. Compania de Transporte | Metrogas vs. Transportadora de Gas | Metrogas vs. United States Steel | Metrogas vs. Agrometal SAI |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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