Correlation Between Ledesma SAAI and Distribuidora
Can any of the company-specific risk be diversified away by investing in both Ledesma SAAI and 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 Ledesma SAAI and Distribuidora into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ledesma SAAI and Distribuidora de Gas, you can compare the effects of market volatilities on Ledesma SAAI and 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 Ledesma SAAI with a short position of Distribuidora. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ledesma SAAI and Distribuidora.
Diversification Opportunities for Ledesma SAAI and Distribuidora
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ledesma and Distribuidora is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Ledesma SAAI and Distribuidora de Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Distribuidora de Gas and Ledesma SAAI 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 Ledesma SAAI are associated (or correlated) with Distribuidora. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Distribuidora de Gas has no effect on the direction of Ledesma SAAI i.e., Ledesma SAAI and Distribuidora go up and down completely randomly.
Pair Corralation between Ledesma SAAI and Distribuidora
Assuming the 90 days trading horizon Ledesma SAAI is expected to generate 0.52 times more return on investment than Distribuidora. However, Ledesma SAAI is 1.94 times less risky than Distribuidora. It trades about -0.08 of its potential returns per unit of risk. Distribuidora de Gas is currently generating about -0.11 per unit of risk. If you would invest 146,000 in Ledesma SAAI on October 20, 2024 and sell it today you would lose (4,500) from holding Ledesma SAAI or give up 3.08% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.0% |
| Values | Daily Returns |
Ledesma SAAI vs. Distribuidora de Gas
Performance |
| Timeline |
| Ledesma SAAI |
| Distribuidora de Gas |
Ledesma SAAI and Distribuidora Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ledesma SAAI and Distribuidora
The main advantage of trading using opposite Ledesma SAAI and Distribuidora positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ledesma SAAI position performs unexpectedly, 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 Distribuidora will offset losses from the drop in Distribuidora's long position.| Ledesma SAAI vs. Molinos Agro SA | Ledesma SAAI vs. Cresud SA | Ledesma SAAI vs. San Miguel AG | Ledesma SAAI vs. Inversora Juramento SA |
| Distribuidora vs. Naturgy BAN SA | Distribuidora vs. Transportadora de Gas | Distribuidora vs. Walmart | Distribuidora vs. Central Puerto SA |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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