Correlation Between Agrometal SAI and Molinos Agro
Can any of the company-specific risk be diversified away by investing in both Agrometal SAI and Molinos Agro 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 Molinos Agro into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Agrometal SAI and Molinos Agro SA, you can compare the effects of market volatilities on Agrometal SAI and Molinos Agro 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 Molinos Agro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Agrometal SAI and Molinos Agro.
Diversification Opportunities for Agrometal SAI and Molinos Agro
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Agrometal and Molinos is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Agrometal SAI and Molinos Agro SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Molinos Agro 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 Molinos Agro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Molinos Agro SA has no effect on the direction of Agrometal SAI i.e., Agrometal SAI and Molinos Agro go up and down completely randomly.
Pair Corralation between Agrometal SAI and Molinos Agro
Assuming the 90 days trading horizon Agrometal SAI is expected to under-perform the Molinos Agro. But the stock apears to be less risky and, when comparing its historical volatility, Agrometal SAI is 2.33 times less risky than Molinos Agro. The stock trades about -0.29 of its potential returns per unit of risk. The Molinos Agro SA is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 3,122,500 in Molinos Agro SA on October 24, 2024 and sell it today you would lose (132,500) from holding Molinos Agro SA or give up 4.24% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Agrometal SAI vs. Molinos Agro SA
Performance |
| Timeline |
| Agrometal SAI |
| Molinos Agro SA |
Agrometal SAI and Molinos Agro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Agrometal SAI and Molinos Agro
The main advantage of trading using opposite Agrometal SAI and Molinos Agro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Agrometal SAI position performs unexpectedly, Molinos Agro 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 Molinos Agro will offset losses from the drop in Molinos Agro's long position.| Agrometal SAI vs. Transportadora de Gas | Agrometal SAI vs. Harmony Gold Mining | Agrometal SAI vs. United States Steel | Agrometal SAI vs. Compania de Transporte |
| Molinos Agro vs. Harmony Gold Mining | Molinos Agro vs. Agrometal SAI | Molinos Agro vs. United States Steel | Molinos Agro vs. Transportadora de Gas |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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