Correlation Between Molinos Agro and Ledesma SAAI
Can any of the company-specific risk be diversified away by investing in both Molinos Agro and Ledesma SAAI 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 Ledesma SAAI 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 Ledesma SAAI, you can compare the effects of market volatilities on Molinos Agro and Ledesma SAAI 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 Ledesma SAAI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Molinos Agro and Ledesma SAAI.
Diversification Opportunities for Molinos Agro and Ledesma SAAI
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Molinos and Ledesma is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Molinos Agro SA and Ledesma SAAI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ledesma SAAI 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 Ledesma SAAI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ledesma SAAI has no effect on the direction of Molinos Agro i.e., Molinos Agro and Ledesma SAAI go up and down completely randomly.
Pair Corralation between Molinos Agro and Ledesma SAAI
Assuming the 90 days trading horizon Molinos Agro SA is expected to generate 3.6 times more return on investment than Ledesma SAAI. However, Molinos Agro is 3.6 times more volatile than Ledesma SAAI. It trades about 0.09 of its potential returns per unit of risk. Ledesma SAAI is currently generating about -0.08 per unit of risk. If you would invest 2,560,000 in Molinos Agro SA on October 20, 2024 and sell it today you would earn a total of 215,000 from holding Molinos Agro SA or generate 8.4% 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. Ledesma SAAI
Performance |
| Timeline |
| Molinos Agro SA |
| Ledesma SAAI |
Molinos Agro and Ledesma SAAI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Molinos Agro and Ledesma SAAI
The main advantage of trading using opposite Molinos Agro and Ledesma SAAI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Molinos Agro position performs unexpectedly, Ledesma SAAI 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 Ledesma SAAI will offset losses from the drop in Ledesma SAAI's long position.| Molinos Agro vs. Cresud SA | Molinos Agro vs. San Miguel AG | Molinos Agro vs. Ledesma SAAI | Molinos Agro vs. Inversora Juramento SA |
| Ledesma SAAI vs. Molinos Agro SA | Ledesma SAAI vs. Cresud SA | Ledesma SAAI vs. San Miguel AG | Ledesma SAAI vs. Inversora Juramento 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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