Correlation Between Grupo Financiero and Empresa Distribuidora
Can any of the company-specific risk be diversified away by investing in both Grupo Financiero and Empresa Distribuidora 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 Grupo Financiero and Empresa Distribuidora into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Grupo Financiero Galicia and Empresa Distribuidora y, you can compare the effects of market volatilities on Grupo Financiero and Empresa Distribuidora 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 Grupo Financiero with a short position of Empresa Distribuidora. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grupo Financiero and Empresa Distribuidora.
Diversification Opportunities for Grupo Financiero and Empresa Distribuidora
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Grupo and Empresa is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Financiero Galicia and Empresa Distribuidora y in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Empresa Distribuidora and Grupo Financiero 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 Grupo Financiero Galicia are associated (or correlated) with Empresa Distribuidora. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Empresa Distribuidora has no effect on the direction of Grupo Financiero i.e., Grupo Financiero and Empresa Distribuidora go up and down completely randomly.
Pair Corralation between Grupo Financiero and Empresa Distribuidora
Assuming the 90 days trading horizon Grupo Financiero is expected to generate 5.0 times less return on investment than Empresa Distribuidora. But when comparing it to its historical volatility, Grupo Financiero Galicia is 1.34 times less risky than Empresa Distribuidora. It trades about 0.09 of its potential returns per unit of risk. Empresa Distribuidora y is currently generating about 0.35 of returns per unit of risk over similar time horizon. If you would invest 182,000 in Empresa Distribuidora y on September 2, 2024 and sell it today you would earn a total of 34,000 from holding Empresa Distribuidora y or generate 18.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Grupo Financiero Galicia vs. Empresa Distribuidora y
Performance |
| Timeline |
| Grupo Financiero Galicia |
| Empresa Distribuidora |
Grupo Financiero and Empresa Distribuidora Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Grupo Financiero and Empresa Distribuidora
The main advantage of trading using opposite Grupo Financiero and Empresa Distribuidora positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grupo Financiero position performs unexpectedly, Empresa Distribuidora 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 Empresa Distribuidora will offset losses from the drop in Empresa Distribuidora's long position.| Grupo Financiero vs. Harmony Gold Mining | Grupo Financiero vs. Compania de Transporte | Grupo Financiero vs. Agrometal SAI | Grupo Financiero vs. Telecom Argentina |
| Empresa Distribuidora vs. Telecom Argentina | Empresa Distribuidora vs. Transportadora de Gas | Empresa Distribuidora vs. Harmony Gold Mining | Empresa Distribuidora vs. Compania de Transporte |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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