Correlation Between Edesa Holding and Molinos Agro
Can any of the company-specific risk be diversified away by investing in both Edesa Holding and Molinos Agro 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 Edesa Holding and Molinos Agro into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Edesa Holding SA and Molinos Agro SA, you can compare the effects of market volatilities on Edesa Holding and Molinos Agro 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 Edesa Holding with a short position of Molinos Agro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Edesa Holding and Molinos Agro.
Diversification Opportunities for Edesa Holding and Molinos Agro
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Edesa and Molinos is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Edesa Holding SA and Molinos Agro SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Molinos Agro SA and Edesa Holding 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 Edesa Holding SA are associated (or correlated) with Molinos Agro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Molinos Agro SA has no effect on the direction of Edesa Holding i.e., Edesa Holding and Molinos Agro go up and down completely randomly.
Pair Corralation between Edesa Holding and Molinos Agro
Assuming the 90 days trading horizon Edesa Holding is expected to generate 4.91 times less return on investment than Molinos Agro. But when comparing it to its historical volatility, Edesa Holding SA is 3.11 times less risky than Molinos Agro. It trades about 0.08 of its potential returns per unit of risk. Molinos Agro SA is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 545,295 in Molinos Agro SA on August 31, 2024 and sell it today you would earn a total of 1,654,705 from holding Molinos Agro SA or generate 303.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 99.73% |
| Values | Daily Returns |
Edesa Holding SA vs. Molinos Agro SA
Performance |
| Timeline |
| Edesa Holding SA |
| Molinos Agro SA |
Edesa Holding and Molinos Agro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Edesa Holding and Molinos Agro
The main advantage of trading using opposite Edesa Holding and Molinos Agro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Edesa Holding position performs unexpectedly, Molinos Agro 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 Molinos Agro will offset losses from the drop in Molinos Agro's long position.| Edesa Holding vs. United States Steel | Edesa Holding vs. Agrometal SAI | Edesa Holding vs. Compania de Transporte |
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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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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