Correlation Between Molinos Agro and Central Puerto
Can any of the company-specific risk be diversified away by investing in both Molinos Agro and Central Puerto 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 Molinos Agro and Central Puerto into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Molinos Agro SA and Central Puerto SA, you can compare the effects of market volatilities on Molinos Agro and Central Puerto 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 Molinos Agro with a short position of Central Puerto. Check out your portfolio center. Please also check ongoing floating volatility patterns of Molinos Agro and Central Puerto.
Diversification Opportunities for Molinos Agro and Central Puerto
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Molinos and Central is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Molinos Agro SA and Central Puerto SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Central Puerto SA and Molinos Agro 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 Molinos Agro SA are associated (or correlated) with Central Puerto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Central Puerto SA has no effect on the direction of Molinos Agro i.e., Molinos Agro and Central Puerto go up and down completely randomly.
Pair Corralation between Molinos Agro and Central Puerto
Assuming the 90 days trading horizon Molinos Agro is expected to generate 1.3 times less return on investment than Central Puerto. In addition to that, Molinos Agro is 1.11 times more volatile than Central Puerto SA. It trades about 0.05 of its total potential returns per unit of risk. Central Puerto SA is currently generating about 0.07 per unit of volatility. If you would invest 70,250 in Central Puerto SA on January 21, 2025 and sell it today you would earn a total of 61,750 from holding Central Puerto SA or generate 87.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Molinos Agro SA vs. Central Puerto SA
Performance |
| Timeline |
| Molinos Agro SA |
| Central Puerto SA |
Molinos Agro and Central Puerto Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Molinos Agro and Central Puerto
The main advantage of trading using opposite Molinos Agro and Central Puerto positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Molinos Agro position performs unexpectedly, Central Puerto 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 Central Puerto will offset losses from the drop in Central Puerto's long position.| Molinos Agro vs. United States Steel | Molinos Agro vs. Verizon Communications | Molinos Agro vs. Compania de Transporte | Molinos Agro vs. Agrometal SAI |
| Central Puerto vs. Empresa Distribuidora y | Central Puerto vs. Enel Generacion Costanera | Central Puerto vs. Edesa Holding 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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