Correlation Between Molinos Agro and Cresud SA
Can any of the company-specific risk be diversified away by investing in both Molinos Agro and Cresud 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 Molinos Agro and Cresud SA 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 Cresud SA, you can compare the effects of market volatilities on Molinos Agro and Cresud 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 Molinos Agro with a short position of Cresud SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Molinos Agro and Cresud SA.
Diversification Opportunities for Molinos Agro and Cresud SA
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Molinos and Cresud is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Molinos Agro SA and Cresud SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cresud 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 Cresud SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cresud SA has no effect on the direction of Molinos Agro i.e., Molinos Agro and Cresud SA go up and down completely randomly.
Pair Corralation between Molinos Agro and Cresud SA
Assuming the 90 days trading horizon Molinos Agro is expected to generate 1.25 times less return on investment than Cresud SA. But when comparing it to its historical volatility, Molinos Agro SA is 1.06 times less risky than Cresud SA. It trades about 0.38 of its potential returns per unit of risk. Cresud SA is currently generating about 0.44 of returns per unit of risk over similar time horizon. If you would invest 107,633 in Cresud SA on September 2, 2024 and sell it today you would earn a total of 29,367 from holding Cresud SA or generate 27.28% 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. Cresud SA
Performance |
| Timeline |
| Molinos Agro SA |
| Cresud SA |
Molinos Agro and Cresud SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Molinos Agro and Cresud SA
The main advantage of trading using opposite Molinos Agro and Cresud SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Molinos Agro position performs unexpectedly, Cresud 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 Cresud SA will offset losses from the drop in Cresud SA's long position.| Molinos Agro vs. Harmony Gold Mining | Molinos Agro vs. Compania de Transporte | Molinos Agro vs. Agrometal SAI |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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