Correlation Between Central Puerto and Aluar Aluminio
Can any of the company-specific risk be diversified away by investing in both Central Puerto and Aluar Aluminio 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 Aluar Aluminio 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 Aluar Aluminio Argentino, you can compare the effects of market volatilities on Central Puerto and Aluar Aluminio 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 Aluar Aluminio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Central Puerto and Aluar Aluminio.
Diversification Opportunities for Central Puerto and Aluar Aluminio
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Central and Aluar is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Central Puerto SA and Aluar Aluminio Argentino in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aluar Aluminio Argentino 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 Aluar Aluminio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aluar Aluminio Argentino has no effect on the direction of Central Puerto i.e., Central Puerto and Aluar Aluminio go up and down completely randomly.
Pair Corralation between Central Puerto and Aluar Aluminio
Assuming the 90 days trading horizon Central Puerto SA is expected to under-perform the Aluar Aluminio. In addition to that, Central Puerto is 1.53 times more volatile than Aluar Aluminio Argentino. It trades about -0.05 of its total potential returns per unit of risk. Aluar Aluminio Argentino is currently generating about -0.06 per unit of volatility. 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 | 95.45% |
| Values | Daily Returns |
Central Puerto SA vs. Aluar Aluminio Argentino
Performance |
| Timeline |
| Central Puerto SA |
| Aluar Aluminio Argentino |
Central Puerto and Aluar Aluminio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Central Puerto and Aluar Aluminio
The main advantage of trading using opposite Central Puerto and Aluar Aluminio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Central Puerto position performs unexpectedly, Aluar Aluminio 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 Aluar Aluminio will offset losses from the drop in Aluar Aluminio's long position.| Central Puerto vs. United States Steel | Central Puerto vs. Harmony Gold Mining | Central Puerto vs. Telecom Argentina | Central Puerto vs. Agrometal SAI |
| Aluar Aluminio vs. Grimoldi SA | Aluar Aluminio vs. Transportadora de Gas | Aluar Aluminio vs. Agrometal SAI | Aluar Aluminio vs. Alphabet Inc Class A CEDEAR |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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