Correlation Between Distribuidora and Cresud SA
Can any of the company-specific risk be diversified away by investing in both Distribuidora and Cresud SA 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 Cresud SA 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 Cresud SA, you can compare the effects of market volatilities on Distribuidora and Cresud SA 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 Cresud SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Distribuidora and Cresud SA.
Diversification Opportunities for Distribuidora and Cresud SA
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Distribuidora and Cresud is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Distribuidora de Gas and Cresud SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cresud 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 Cresud SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cresud SA has no effect on the direction of Distribuidora i.e., Distribuidora and Cresud SA go up and down completely randomly.
Pair Corralation between Distribuidora and Cresud SA
Assuming the 90 days trading horizon Distribuidora de Gas is expected to generate 1.32 times more return on investment than Cresud SA. However, Distribuidora is 1.32 times more volatile than Cresud SA. It trades about 0.13 of its potential returns per unit of risk. Cresud SA is currently generating about 0.08 per unit of risk. If you would invest 117,550 in Distribuidora de Gas on September 2, 2024 and sell it today you would earn a total of 75,950 from holding Distribuidora de Gas or generate 64.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Distribuidora de Gas vs. Cresud SA
Performance |
| Timeline |
| Distribuidora de Gas |
| Cresud SA |
Distribuidora and Cresud SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Distribuidora and Cresud SA
The main advantage of trading using opposite Distribuidora and Cresud SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Distribuidora position performs unexpectedly, Cresud SA 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 Cresud SA will offset losses from the drop in Cresud SA's long position.| Distribuidora vs. Compania de Transporte | Distribuidora vs. Agrometal SAI | Distribuidora vs. Telecom Argentina | Distribuidora 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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