Correlation Between Agrometal SAI and Compania
Can any of the company-specific risk be diversified away by investing in both Agrometal SAI and Compania 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 Compania into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Agrometal SAI and Compania de Transporte, you can compare the effects of market volatilities on Agrometal SAI and Compania 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 Compania. Check out your portfolio center. Please also check ongoing floating volatility patterns of Agrometal SAI and Compania.
Diversification Opportunities for Agrometal SAI and Compania
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Agrometal and Compania is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Agrometal SAI and Compania de Transporte in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compania de Transporte 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 Compania. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compania de Transporte has no effect on the direction of Agrometal SAI i.e., Agrometal SAI and Compania go up and down completely randomly.
Pair Corralation between Agrometal SAI and Compania
Assuming the 90 days trading horizon Agrometal SAI is expected to generate 1.38 times less return on investment than Compania. But when comparing it to its historical volatility, Agrometal SAI is 1.14 times less risky than Compania. It trades about 0.08 of its potential returns per unit of risk. Compania de Transporte is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 160,100 in Compania de Transporte on August 23, 2024 and sell it today you would earn a total of 60,900 from holding Compania de Transporte or generate 38.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Agrometal SAI vs. Compania de Transporte
Performance |
| Timeline |
| Agrometal SAI |
| Compania de Transporte |
Agrometal SAI and Compania Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Agrometal SAI and Compania
The main advantage of trading using opposite Agrometal SAI and Compania positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Agrometal SAI position performs unexpectedly, Compania 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 Compania will offset losses from the drop in Compania'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 |
| Compania vs. United States Steel | Compania vs. Pfizer Inc | Compania vs. Garovaglio y Zorraquin | Compania 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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