Correlation Between Central Puerto and Compania
Can any of the company-specific risk be diversified away by investing in both Central Puerto and Compania 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 Compania 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 Compania de Transporte, you can compare the effects of market volatilities on Central Puerto and Compania 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 Compania. Check out your portfolio center. Please also check ongoing floating volatility patterns of Central Puerto and Compania.
Diversification Opportunities for Central Puerto and Compania
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Central and Compania is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Central Puerto SA and Compania de Transporte in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compania de Transporte 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 Compania. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compania de Transporte has no effect on the direction of Central Puerto i.e., Central Puerto and Compania go up and down completely randomly.
Pair Corralation between Central Puerto and Compania
Assuming the 90 days trading horizon Central Puerto SA is expected to generate 0.9 times more return on investment than Compania. However, Central Puerto SA is 1.11 times less risky than Compania. It trades about 0.27 of its potential returns per unit of risk. Compania de Transporte is currently generating about 0.14 per unit of risk. If you would invest 130,500 in Central Puerto SA on September 1, 2024 and sell it today you would earn a total of 21,000 from holding Central Puerto SA or generate 16.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Central Puerto SA vs. Compania de Transporte
Performance |
| Timeline |
| Central Puerto SA |
| Compania de Transporte |
Central Puerto and Compania Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Central Puerto and Compania
The main advantage of trading using opposite Central Puerto and Compania positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Central Puerto position performs unexpectedly, Compania 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 Compania will offset losses from the drop in Compania'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 |
| Compania vs. Agrometal SAI | Compania vs. Harmony Gold Mining | Compania vs. Transportadora de Gas | Compania vs. United States Steel |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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