Correlation Between Transportadora and Agrometal SAI
Can any of the company-specific risk be diversified away by investing in both Transportadora and Agrometal SAI 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 Transportadora and Agrometal SAI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Transportadora de Gas and Agrometal SAI, you can compare the effects of market volatilities on Transportadora and Agrometal SAI 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 Transportadora with a short position of Agrometal SAI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transportadora and Agrometal SAI.
Diversification Opportunities for Transportadora and Agrometal SAI
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Transportadora and Agrometal is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Transportadora de Gas and Agrometal SAI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agrometal SAI and Transportadora 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 Transportadora de Gas are associated (or correlated) with Agrometal SAI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Agrometal SAI has no effect on the direction of Transportadora i.e., Transportadora and Agrometal SAI go up and down completely randomly.
Pair Corralation between Transportadora and Agrometal SAI
Assuming the 90 days trading horizon Transportadora de Gas is expected to generate 1.31 times more return on investment than Agrometal SAI. However, Transportadora is 1.31 times more volatile than Agrometal SAI. It trades about 0.09 of its potential returns per unit of risk. Agrometal SAI is currently generating about -0.23 per unit of risk. If you would invest 637,000 in Transportadora de Gas on October 20, 2024 and sell it today you would earn a total of 35,000 from holding Transportadora de Gas or generate 5.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Transportadora de Gas vs. Agrometal SAI
Performance |
| Timeline |
| Transportadora de Gas |
| Agrometal SAI |
Transportadora and Agrometal SAI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Transportadora and Agrometal SAI
The main advantage of trading using opposite Transportadora and Agrometal SAI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transportadora position performs unexpectedly, Agrometal SAI 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 Agrometal SAI will offset losses from the drop in Agrometal SAI's long position.| Transportadora vs. Agrometal SAI | Transportadora vs. Harmony Gold Mining | Transportadora vs. Compania de Transporte | Transportadora vs. United States Steel |
| Agrometal SAI vs. Transportadora de Gas | Agrometal SAI vs. Harmony Gold Mining | Agrometal SAI vs. United States Steel | Agrometal SAI vs. Telecom Argentina |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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