Correlation Between Carboclor and Agrometal SAI
Can any of the company-specific risk be diversified away by investing in both Carboclor 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 Carboclor and Agrometal SAI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Carboclor and Agrometal SAI, you can compare the effects of market volatilities on Carboclor 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 Carboclor with a short position of Agrometal SAI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carboclor and Agrometal SAI.
Diversification Opportunities for Carboclor and Agrometal SAI
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Carboclor and Agrometal is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Carboclor and Agrometal SAI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agrometal SAI and Carboclor 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 Carboclor 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 Carboclor i.e., Carboclor and Agrometal SAI go up and down completely randomly.
Pair Corralation between Carboclor and Agrometal SAI
Assuming the 90 days trading horizon Carboclor is expected to generate 1.17 times more return on investment than Agrometal SAI. However, Carboclor is 1.17 times more volatile than Agrometal SAI. It trades about -0.13 of its potential returns per unit of risk. Agrometal SAI is currently generating about -0.23 per unit of risk. If you would invest 3,335 in Carboclor on October 20, 2024 and sell it today you would lose (300.00) from holding Carboclor or give up 9.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Carboclor vs. Agrometal SAI
Performance |
| Timeline |
| Carboclor |
| Agrometal SAI |
Carboclor and Agrometal SAI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Carboclor and Agrometal SAI
The main advantage of trading using opposite Carboclor and Agrometal SAI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carboclor 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.| Carboclor vs. Telecom Argentina | Carboclor vs. Transportadora de Gas | Carboclor vs. United States Steel | Carboclor vs. Compania de Transporte |
| Agrometal SAI vs. Transportadora de Gas | Agrometal SAI vs. Harmony Gold Mining | Agrometal SAI vs. United States Steel | Agrometal SAI vs. Telecom Argentina |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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