Correlation Between Metrogas and Distribuidora
Can any of the company-specific risk be diversified away by investing in both Metrogas 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 Metrogas and Distribuidora into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Metrogas SA and Distribuidora de Gas, you can compare the effects of market volatilities on Metrogas 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 Metrogas with a short position of Distribuidora. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metrogas and Distribuidora.
Diversification Opportunities for Metrogas and Distribuidora
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Metrogas and Distribuidora is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Metrogas SA 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 Metrogas 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 Metrogas SA 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 Metrogas i.e., Metrogas and Distribuidora go up and down completely randomly.
Pair Corralation between Metrogas and Distribuidora
Assuming the 90 days trading horizon Metrogas SA is expected to generate 1.07 times more return on investment than Distribuidora. However, Metrogas is 1.07 times more volatile than Distribuidora de Gas. It trades about 0.39 of its potential returns per unit of risk. Distribuidora de Gas is currently generating about 0.22 per unit of risk. If you would invest 115,500 in Metrogas SA on August 31, 2024 and sell it today you would earn a total of 106,000 from holding Metrogas SA or generate 91.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 98.41% |
| Values | Daily Returns |
Metrogas SA vs. Distribuidora de Gas
Performance |
| Timeline |
| Metrogas SA |
| Distribuidora de Gas |
Metrogas and Distribuidora Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Metrogas and Distribuidora
The main advantage of trading using opposite Metrogas and Distribuidora positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Metrogas 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.| Metrogas vs. Pfizer Inc | Metrogas vs. Instituto Rosenbusch SA | Metrogas vs. Sociedad Comercial del | Metrogas vs. Ledesma SAAI |
| Distribuidora vs. United States Steel | Distribuidora vs. Compania de Transporte | Distribuidora vs. Transportadora de Gas | Distribuidora vs. Harmony Gold Mining |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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