Correlation Between Agrometal SAI and Transportadora
Can any of the company-specific risk be diversified away by investing in both Agrometal SAI and Transportadora 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 Transportadora into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Agrometal SAI and Transportadora de Gas, you can compare the effects of market volatilities on Agrometal SAI and Transportadora 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 Transportadora. Check out your portfolio center. Please also check ongoing floating volatility patterns of Agrometal SAI and Transportadora.
Diversification Opportunities for Agrometal SAI and Transportadora
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Agrometal and Transportadora is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Agrometal SAI and Transportadora de Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transportadora de Gas 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 Transportadora. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transportadora de Gas has no effect on the direction of Agrometal SAI i.e., Agrometal SAI and Transportadora go up and down completely randomly.
Pair Corralation between Agrometal SAI and Transportadora
Assuming the 90 days trading horizon Agrometal SAI is expected to generate 1.47 times less return on investment than Transportadora. But when comparing it to its historical volatility, Agrometal SAI is 1.17 times less risky than Transportadora. It trades about 0.08 of its potential returns per unit of risk. Transportadora de Gas is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 445,170 in Transportadora de Gas on August 23, 2024 and sell it today you would earn a total of 183,830 from holding Transportadora de Gas or generate 41.29% 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. Transportadora de Gas
Performance |
| Timeline |
| Agrometal SAI |
| Transportadora de Gas |
Agrometal SAI and Transportadora Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Agrometal SAI and Transportadora
The main advantage of trading using opposite Agrometal SAI and Transportadora positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Agrometal SAI position performs unexpectedly, Transportadora 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 Transportadora will offset losses from the drop in Transportadora's long position.| Agrometal SAI vs. United States Steel | Agrometal SAI vs. Harmony Gold Mining | Agrometal SAI vs. Transportadora de Gas | Agrometal SAI vs. Compania de Transporte |
| Transportadora vs. United States Steel | Transportadora vs. Pfizer Inc | Transportadora vs. Garovaglio y Zorraquin | Transportadora vs. Ternium SA DRC |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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