Correlation Between Astar and Central Puerto
Can any of the company-specific risk be diversified away by investing in both Astar and Central Puerto 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 Astar and Central Puerto into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Astar and Central Puerto SA, you can compare the effects of market volatilities on Astar and Central Puerto 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 Astar with a short position of Central Puerto. Check out your portfolio center. Please also check ongoing floating volatility patterns of Astar and Central Puerto.
Diversification Opportunities for Astar and Central Puerto
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Astar and Central is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Astar and Central Puerto SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Central Puerto SA and Astar 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 Astar are associated (or correlated) with Central Puerto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Central Puerto SA has no effect on the direction of Astar i.e., Astar and Central Puerto go up and down completely randomly.
Pair Corralation between Astar and Central Puerto
Assuming the 90 days trading horizon Astar is expected to generate 1.69 times more return on investment than Central Puerto. However, Astar is 1.69 times more volatile than Central Puerto SA. It trades about 0.05 of its potential returns per unit of risk. Central Puerto SA is currently generating about -0.03 per unit of risk. If you would invest 6.20 in Astar on October 20, 2024 and sell it today you would earn a total of 0.16 from holding Astar or generate 2.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 90.91% |
| Values | Daily Returns |
Astar vs. Central Puerto SA
Performance |
| Timeline |
| Astar |
| Central Puerto SA |
Astar and Central Puerto Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Astar and Central Puerto
The main advantage of trading using opposite Astar and Central Puerto positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Astar position performs unexpectedly, Central Puerto 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 Central Puerto will offset losses from the drop in Central Puerto's long position.The idea behind Astar and Central Puerto SA pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Central Puerto vs. Enel Generacion Costanera | Central Puerto vs. Edesa Holding SA | Central Puerto vs. Empresa Distribuidora Electrica |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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