Correlation Between Ferrum SA and Transportadora
Can any of the company-specific risk be diversified away by investing in both Ferrum SA and Transportadora 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 Ferrum SA and Transportadora into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ferrum SA and Transportadora de Gas, you can compare the effects of market volatilities on Ferrum SA and Transportadora 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 Ferrum SA with a short position of Transportadora. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ferrum SA and Transportadora.
Diversification Opportunities for Ferrum SA and Transportadora
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Ferrum and Transportadora is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Ferrum SA and Transportadora de Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transportadora de Gas and Ferrum 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 Ferrum SA are associated (or correlated) with Transportadora. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transportadora de Gas has no effect on the direction of Ferrum SA i.e., Ferrum SA and Transportadora go up and down completely randomly.
Pair Corralation between Ferrum SA and Transportadora
Assuming the 90 days trading horizon Ferrum SA is expected to generate 0.62 times more return on investment than Transportadora. However, Ferrum SA is 1.6 times less risky than Transportadora. It trades about -0.16 of its potential returns per unit of risk. Transportadora de Gas is currently generating about -0.14 per unit of risk. If you would invest 4,290 in Ferrum SA on November 3, 2024 and sell it today you would lose (365.00) from holding Ferrum SA or give up 8.51% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ferrum SA vs. Transportadora de Gas
Performance |
| Timeline |
| Ferrum SA |
| Transportadora de Gas |
Ferrum SA and Transportadora Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ferrum SA and Transportadora
The main advantage of trading using opposite Ferrum SA and Transportadora positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ferrum SA position performs unexpectedly, Transportadora 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 Transportadora will offset losses from the drop in Transportadora's long position.| Ferrum SA vs. Loma Negra Compania | Ferrum SA vs. Holcim Argentina SA | Ferrum SA vs. Edesa Holding SA | Ferrum SA vs. Longvie SA |
| Transportadora vs. Harmony Gold Mining | Transportadora vs. Compania de Transporte | Transportadora vs. Telecom Argentina | Transportadora 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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