Correlation Between Distribuidora and Central Puerto
Can any of the company-specific risk be diversified away by investing in both Distribuidora and Central Puerto 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 Distribuidora and Central Puerto into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Distribuidora de Gas and Central Puerto SA, you can compare the effects of market volatilities on Distribuidora and Central Puerto 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 Distribuidora with a short position of Central Puerto. Check out your portfolio center. Please also check ongoing floating volatility patterns of Distribuidora and Central Puerto.
Diversification Opportunities for Distribuidora and Central Puerto
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Distribuidora and Central is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Distribuidora de Gas and Central Puerto SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Central Puerto SA and Distribuidora 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 Distribuidora de Gas are associated (or correlated) with Central Puerto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Central Puerto SA has no effect on the direction of Distribuidora i.e., Distribuidora and Central Puerto go up and down completely randomly.
Pair Corralation between Distribuidora and Central Puerto
Assuming the 90 days trading horizon Distribuidora de Gas is expected to generate 1.18 times more return on investment than Central Puerto. However, Distribuidora is 1.18 times more volatile than Central Puerto SA. It trades about 0.1 of its potential returns per unit of risk. Central Puerto SA is currently generating about -0.05 per unit of risk. If you would invest 192,500 in Distribuidora de Gas on November 2, 2024 and sell it today you would earn a total of 14,500 from holding Distribuidora de Gas or generate 7.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Distribuidora de Gas vs. Central Puerto SA
Performance |
| Timeline |
| Distribuidora de Gas |
| Central Puerto SA |
Distribuidora and Central Puerto Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Distribuidora and Central Puerto
The main advantage of trading using opposite Distribuidora and Central Puerto positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Distribuidora position performs unexpectedly, Central Puerto 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 Central Puerto will offset losses from the drop in Central Puerto's long position.| Distribuidora vs. Naturgy BAN SA | Distribuidora vs. Transportadora de Gas | Distribuidora vs. International Business Machines |
| Central Puerto vs. United States Steel | Central Puerto vs. Harmony Gold Mining | Central Puerto vs. Telecom Argentina | Central Puerto vs. Agrometal SAI |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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