Correlation Between Capex SA and Agrometal SAI
Can any of the company-specific risk be diversified away by investing in both Capex SA and Agrometal SAI 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 Capex SA and Agrometal SAI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Capex SA and Agrometal SAI, you can compare the effects of market volatilities on Capex SA and Agrometal SAI 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 Capex SA with a short position of Agrometal SAI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capex SA and Agrometal SAI.
Diversification Opportunities for Capex SA and Agrometal SAI
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Capex and Agrometal is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Capex SA and Agrometal SAI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agrometal SAI and Capex SA 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 Capex SA are associated (or correlated) with Agrometal SAI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Agrometal SAI has no effect on the direction of Capex SA i.e., Capex SA and Agrometal SAI go up and down completely randomly.
Pair Corralation between Capex SA and Agrometal SAI
Assuming the 90 days trading horizon Capex SA is expected to generate 0.96 times more return on investment than Agrometal SAI. However, Capex SA is 1.05 times less risky than Agrometal SAI. It trades about 0.45 of its potential returns per unit of risk. Agrometal SAI is currently generating about 0.36 per unit of risk. If you would invest 638,000 in Capex SA on September 3, 2024 and sell it today you would earn a total of 255,000 from holding Capex SA or generate 39.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Capex SA vs. Agrometal SAI
Performance |
| Timeline |
| Capex SA |
| Agrometal SAI |
Capex SA and Agrometal SAI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capex SA and Agrometal SAI
The main advantage of trading using opposite Capex SA and Agrometal SAI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capex SA position performs unexpectedly, Agrometal SAI 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 Agrometal SAI will offset losses from the drop in Agrometal SAI's long position.| Capex SA vs. Agrometal SAI | Capex SA vs. Transportadora de Gas | Capex SA vs. Compania de Transporte | Capex SA vs. United States Steel |
| Agrometal SAI vs. Longvie SA | Agrometal SAI vs. United States Steel | Agrometal SAI vs. Capex SA | Agrometal SAI vs. Pfizer Inc |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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