Correlation Between Central Puerto and Transportadora
Can any of the company-specific risk be diversified away by investing in both Central Puerto and Transportadora 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 Transportadora 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 Transportadora de Gas, you can compare the effects of market volatilities on Central Puerto and Transportadora 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 Transportadora. Check out your portfolio center. Please also check ongoing floating volatility patterns of Central Puerto and Transportadora.
Diversification Opportunities for Central Puerto and Transportadora
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Central and Transportadora is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Central Puerto SA and Transportadora de Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transportadora de Gas 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 Transportadora. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transportadora de Gas has no effect on the direction of Central Puerto i.e., Central Puerto and Transportadora go up and down completely randomly.
Pair Corralation between Central Puerto and Transportadora
Assuming the 90 days trading horizon Central Puerto SA is expected to generate 0.88 times more return on investment than Transportadora. However, Central Puerto SA is 1.13 times less risky than Transportadora. It trades about -0.03 of its potential returns per unit of risk. Transportadora de Gas is currently generating about -0.1 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 | Very Strong |
| Accuracy | 95.0% |
| Values | Daily Returns |
Central Puerto SA vs. Transportadora de Gas
Performance |
| Timeline |
| Central Puerto SA |
| Transportadora de Gas |
Central Puerto and Transportadora Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Central Puerto and Transportadora
The main advantage of trading using opposite Central Puerto and Transportadora positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Central Puerto position performs unexpectedly, Transportadora 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 Transportadora will offset losses from the drop in Transportadora's long position.| Central Puerto vs. Enel Generacion Costanera | Central Puerto vs. Edesa Holding SA | Central Puerto vs. Empresa Distribuidora Electrica |
| Transportadora vs. Distribuidora de Gas | Transportadora vs. Walmart | Transportadora vs. Central Puerto SA | Transportadora vs. Bolsas y Mercados |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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