Correlation Between Pampa Energia and Compania
Can any of the company-specific risk be diversified away by investing in both Pampa Energia and Compania 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 Pampa Energia and Compania into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pampa Energia SA and Compania de Transporte, you can compare the effects of market volatilities on Pampa Energia and Compania 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 Pampa Energia with a short position of Compania. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pampa Energia and Compania.
Diversification Opportunities for Pampa Energia and Compania
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Pampa and Compania is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Pampa Energia SA and Compania de Transporte in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compania de Transporte and Pampa Energia 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 Pampa Energia SA are associated (or correlated) with Compania. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compania de Transporte has no effect on the direction of Pampa Energia i.e., Pampa Energia and Compania go up and down completely randomly.
Pair Corralation between Pampa Energia and Compania
Assuming the 90 days trading horizon Pampa Energia SA is expected to under-perform the Compania. In addition to that, Pampa Energia is 1.09 times more volatile than Compania de Transporte. It trades about -0.02 of its total potential returns per unit of risk. Compania de Transporte is currently generating about 0.01 per unit of volatility. If you would invest 283,000 in Compania de Transporte on November 2, 2024 and sell it today you would lose (1,000.00) from holding Compania de Transporte or give up 0.35% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Pampa Energia SA vs. Compania de Transporte
Performance |
| Timeline |
| Pampa Energia SA |
| Compania de Transporte |
Pampa Energia and Compania Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pampa Energia and Compania
The main advantage of trading using opposite Pampa Energia and Compania positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pampa Energia position performs unexpectedly, Compania 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 Compania will offset losses from the drop in Compania's long position.| Pampa Energia vs. Transportadora de Gas | Pampa Energia vs. Compania de Transporte | Pampa Energia vs. United States Steel | Pampa Energia 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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