Correlation Between Empresa Distribuidora and Metrogas
Can any of the company-specific risk be diversified away by investing in both Empresa Distribuidora and Metrogas 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 Empresa Distribuidora and Metrogas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Empresa Distribuidora y and Metrogas SA, you can compare the effects of market volatilities on Empresa Distribuidora and Metrogas 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 Empresa Distribuidora with a short position of Metrogas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Empresa Distribuidora and Metrogas.
Diversification Opportunities for Empresa Distribuidora and Metrogas
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Empresa and Metrogas is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Empresa Distribuidora y and Metrogas SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metrogas SA and Empresa 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 Empresa Distribuidora y are associated (or correlated) with Metrogas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metrogas SA has no effect on the direction of Empresa Distribuidora i.e., Empresa Distribuidora and Metrogas go up and down completely randomly.
Pair Corralation between Empresa Distribuidora and Metrogas
Assuming the 90 days trading horizon Empresa Distribuidora is expected to generate 1.3 times less return on investment than Metrogas. In addition to that, Empresa Distribuidora is 1.09 times more volatile than Metrogas SA. It trades about 0.19 of its total potential returns per unit of risk. Metrogas SA is currently generating about 0.27 per unit of volatility. If you would invest 111,000 in Metrogas SA on November 2, 2024 and sell it today you would earn a total of 150,000 from holding Metrogas SA or generate 135.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Empresa Distribuidora y vs. Metrogas SA
Performance |
| Timeline |
| Empresa Distribuidora |
| Metrogas SA |
Empresa Distribuidora and Metrogas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Empresa Distribuidora and Metrogas
The main advantage of trading using opposite Empresa Distribuidora and Metrogas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Empresa Distribuidora position performs unexpectedly, Metrogas 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 Metrogas will offset losses from the drop in Metrogas' long position.| Empresa Distribuidora vs. Enel Generacion Costanera | Empresa Distribuidora vs. Boldt SA | Empresa Distribuidora vs. Agrometal SAI | Empresa Distribuidora vs. United States Steel |
| Metrogas vs. Edesa Holding SA | Metrogas vs. Longvie SA | Metrogas vs. Vista Energy, SAB | Metrogas vs. American Express Co |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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