Correlation Between Central Puerto and Agrometal SAI
Can any of the company-specific risk be diversified away by investing in both Central Puerto 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 Central Puerto and Agrometal SAI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Central Puerto SA and Agrometal SAI, you can compare the effects of market volatilities on Central Puerto 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 Central Puerto with a short position of Agrometal SAI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Central Puerto and Agrometal SAI.
Diversification Opportunities for Central Puerto and Agrometal SAI
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Central and Agrometal is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Central Puerto SA and Agrometal SAI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agrometal SAI and Central Puerto 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 Central Puerto 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 Central Puerto i.e., Central Puerto and Agrometal SAI go up and down completely randomly.
Pair Corralation between Central Puerto and Agrometal SAI
Assuming the 90 days trading horizon Central Puerto SA is expected to generate 1.12 times more return on investment than Agrometal SAI. However, Central Puerto is 1.12 times more volatile than Agrometal SAI. It trades about -0.03 of its potential returns per unit of risk. Agrometal SAI is currently generating about -0.23 per unit of risk. If you would invest 157,000 in Central Puerto SA on October 20, 2024 and sell it today you would lose (4,000) from holding Central Puerto SA or give up 2.55% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Central Puerto SA vs. Agrometal SAI
Performance |
| Timeline |
| Central Puerto SA |
| Agrometal SAI |
Central Puerto and Agrometal SAI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Central Puerto and Agrometal SAI
The main advantage of trading using opposite Central Puerto and Agrometal SAI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Central Puerto 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.The idea behind Central Puerto SA and Agrometal SAI 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.| 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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