Correlation Between Cresud SA and MercadoLibre
Can any of the company-specific risk be diversified away by investing in both Cresud SA and MercadoLibre 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 Cresud SA and MercadoLibre into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cresud SA and MercadoLibre, you can compare the effects of market volatilities on Cresud SA and MercadoLibre 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 Cresud SA with a short position of MercadoLibre. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cresud SA and MercadoLibre.
Diversification Opportunities for Cresud SA and MercadoLibre
-0.79 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Cresud and MercadoLibre is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Cresud SA and MercadoLibre in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MercadoLibre and Cresud SA 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 Cresud SA are associated (or correlated) with MercadoLibre. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MercadoLibre has no effect on the direction of Cresud SA i.e., Cresud SA and MercadoLibre go up and down completely randomly.
Pair Corralation between Cresud SA and MercadoLibre
Assuming the 90 days trading horizon Cresud SA is expected to generate 1.11 times more return on investment than MercadoLibre. However, Cresud SA is 1.11 times more volatile than MercadoLibre. It trades about 0.37 of its potential returns per unit of risk. MercadoLibre is currently generating about -0.02 per unit of risk. If you would invest 127,500 in Cresud SA on September 19, 2024 and sell it today you would earn a total of 28,000 from holding Cresud SA or generate 21.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cresud SA vs. MercadoLibre
Performance |
| Timeline |
| Cresud SA |
| MercadoLibre |
Cresud SA and MercadoLibre Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cresud SA and MercadoLibre
The main advantage of trading using opposite Cresud SA and MercadoLibre positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cresud SA position performs unexpectedly, MercadoLibre 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 MercadoLibre will offset losses from the drop in MercadoLibre's long position.| Cresud SA vs. Molinos Agro SA | Cresud SA vs. Ledesma SAAI | Cresud SA vs. Edesa Holding SA | Cresud SA vs. Vista Energy, SAB |
| MercadoLibre vs. Harmony Gold Mining | MercadoLibre vs. Agrometal SAI | MercadoLibre vs. Telecom Argentina | MercadoLibre vs. Compania de Transporte |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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