Correlation Between Loma Negra and Transportadora
Can any of the company-specific risk be diversified away by investing in both Loma Negra 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 Loma Negra and Transportadora into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Loma Negra Compania and Transportadora de Gas, you can compare the effects of market volatilities on Loma Negra 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 Loma Negra with a short position of Transportadora. Check out your portfolio center. Please also check ongoing floating volatility patterns of Loma Negra and Transportadora.
Diversification Opportunities for Loma Negra and Transportadora
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Loma and Transportadora is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Loma Negra Compania 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 Loma Negra 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 Loma Negra Compania 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 Loma Negra i.e., Loma Negra and Transportadora go up and down completely randomly.
Pair Corralation between Loma Negra and Transportadora
Assuming the 90 days trading horizon Loma Negra is expected to generate 1.66 times less return on investment than Transportadora. But when comparing it to its historical volatility, Loma Negra Compania is 1.19 times less risky than Transportadora. It trades about 0.11 of its potential returns per unit of risk. Transportadora de Gas is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 277,995 in Transportadora de Gas on August 27, 2024 and sell it today you would earn a total of 380,005 from holding Transportadora de Gas or generate 136.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Loma Negra Compania vs. Transportadora de Gas
Performance |
| Timeline |
| Loma Negra Compania |
| Transportadora de Gas |
Loma Negra and Transportadora Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Loma Negra and Transportadora
The main advantage of trading using opposite Loma Negra and Transportadora positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Loma Negra 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.| Loma Negra vs. Transportadora de Gas | Loma Negra vs. Compania de Transporte | Loma Negra vs. Harmony Gold Mining | Loma Negra vs. United States Steel |
| Transportadora vs. Compania de Transporte | Transportadora vs. Agrometal SAI | Transportadora vs. Harmony Gold Mining | Transportadora vs. Telecom Argentina |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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