Correlation Between Aluar Aluminio and Transportadora
Can any of the company-specific risk be diversified away by investing in both Aluar Aluminio 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 Aluar Aluminio and Transportadora into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aluar Aluminio Argentino and Transportadora de Gas, you can compare the effects of market volatilities on Aluar Aluminio 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 Aluar Aluminio with a short position of Transportadora. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aluar Aluminio and Transportadora.
Diversification Opportunities for Aluar Aluminio and Transportadora
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Aluar and Transportadora is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Aluar Aluminio Argentino 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 Aluar Aluminio 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 Aluar Aluminio Argentino 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 Aluar Aluminio i.e., Aluar Aluminio and Transportadora go up and down completely randomly.
Pair Corralation between Aluar Aluminio and Transportadora
Assuming the 90 days trading horizon Aluar Aluminio Argentino is expected to generate 0.7 times more return on investment than Transportadora. However, Aluar Aluminio Argentino is 1.42 times less risky than Transportadora. It trades about -0.06 of its potential returns per unit of risk. Transportadora de Gas is currently generating about -0.1 per unit of risk. If you would invest 89,300 in Aluar Aluminio Argentino on November 2, 2024 and sell it today you would lose (3,500) from holding Aluar Aluminio Argentino or give up 3.92% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aluar Aluminio Argentino vs. Transportadora de Gas
Performance |
| Timeline |
| Aluar Aluminio Argentino |
| Transportadora de Gas |
Aluar Aluminio and Transportadora Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aluar Aluminio and Transportadora
The main advantage of trading using opposite Aluar Aluminio and Transportadora positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aluar Aluminio 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.| Aluar Aluminio vs. Grimoldi SA | Aluar Aluminio vs. Transportadora de Gas | Aluar Aluminio vs. Agrometal SAI | Aluar Aluminio vs. Alphabet Inc Class A CEDEAR |
| Transportadora vs. Agrometal SAI | Transportadora vs. Harmony Gold Mining | Transportadora vs. Compania de Transporte |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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