Correlation Between Metrogas and Dycasa SA
Can any of the company-specific risk be diversified away by investing in both Metrogas and Dycasa SA 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 Dycasa SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Metrogas SA and Dycasa SA, you can compare the effects of market volatilities on Metrogas and Dycasa SA 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 Dycasa SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metrogas and Dycasa SA.
Diversification Opportunities for Metrogas and Dycasa SA
Very poor diversification
The 3 months correlation between Metrogas and Dycasa is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Metrogas SA and Dycasa SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dycasa SA 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 Dycasa SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dycasa SA has no effect on the direction of Metrogas i.e., Metrogas and Dycasa SA go up and down completely randomly.
Pair Corralation between Metrogas and Dycasa SA
Assuming the 90 days trading horizon Metrogas SA is expected to generate 0.9 times more return on investment than Dycasa SA. However, Metrogas SA is 1.11 times less risky than Dycasa SA. It trades about 0.17 of its potential returns per unit of risk. Dycasa SA is currently generating about 0.12 per unit of risk. If you would invest 8,720 in Metrogas SA on August 27, 2024 and sell it today you would earn a total of 207,780 from holding Metrogas SA or generate 2382.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Metrogas SA vs. Dycasa SA
Performance |
| Timeline |
| Metrogas SA |
| Dycasa SA |
Metrogas and Dycasa SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Metrogas and Dycasa SA
The main advantage of trading using opposite Metrogas and Dycasa SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Metrogas position performs unexpectedly, Dycasa SA 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 Dycasa SA will offset losses from the drop in Dycasa SA's long position.The idea behind Metrogas SA and Dycasa SA pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Dycasa SA vs. Pampa Energia SA | Dycasa SA vs. American Express Co | Dycasa SA vs. United States Steel | Dycasa SA vs. Pfizer Inc |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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