Correlation Between Central Puerto and Grupo Financiero
Can any of the company-specific risk be diversified away by investing in both Central Puerto and Grupo Financiero 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 Grupo Financiero 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 Grupo Financiero Galicia, you can compare the effects of market volatilities on Central Puerto and Grupo Financiero 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 Grupo Financiero. Check out your portfolio center. Please also check ongoing floating volatility patterns of Central Puerto and Grupo Financiero.
Diversification Opportunities for Central Puerto and Grupo Financiero
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Central and Grupo is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Central Puerto SA and Grupo Financiero Galicia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Financiero Galicia 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 Grupo Financiero. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo Financiero Galicia has no effect on the direction of Central Puerto i.e., Central Puerto and Grupo Financiero go up and down completely randomly.
Pair Corralation between Central Puerto and Grupo Financiero
Assuming the 90 days trading horizon Central Puerto is expected to generate 1.62 times less return on investment than Grupo Financiero. In addition to that, Central Puerto is 1.06 times more volatile than Grupo Financiero Galicia. It trades about 0.08 of its total potential returns per unit of risk. Grupo Financiero Galicia is currently generating about 0.14 per unit of volatility. If you would invest 400,885 in Grupo Financiero Galicia on September 1, 2024 and sell it today you would earn a total of 228,115 from holding Grupo Financiero Galicia or generate 56.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.2% |
| Values | Daily Returns |
Central Puerto SA vs. Grupo Financiero Galicia
Performance |
| Timeline |
| Central Puerto SA |
| Grupo Financiero Galicia |
Central Puerto and Grupo Financiero Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Central Puerto and Grupo Financiero
The main advantage of trading using opposite Central Puerto and Grupo Financiero positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Central Puerto position performs unexpectedly, Grupo Financiero 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 Grupo Financiero will offset losses from the drop in Grupo Financiero's long position.| Central Puerto vs. Empresa Distribuidora Electrica | Central Puerto vs. Longvie SA | Central Puerto vs. American Express Co | Central Puerto vs. United States Steel |
| Grupo Financiero vs. Compania de Transporte | Grupo Financiero vs. United States Steel | Grupo Financiero vs. Agrometal SAI | Grupo Financiero vs. Transportadora de Gas |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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