Correlation Between Transportadora and Holcim Argentina
Can any of the company-specific risk be diversified away by investing in both Transportadora and Holcim Argentina 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 Holcim Argentina 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 Holcim Argentina SA, you can compare the effects of market volatilities on Transportadora and Holcim Argentina 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 Holcim Argentina. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transportadora and Holcim Argentina.
Diversification Opportunities for Transportadora and Holcim Argentina
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Transportadora and Holcim is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Transportadora de Gas and Holcim Argentina SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Holcim Argentina 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 Holcim Argentina. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Holcim Argentina has no effect on the direction of Transportadora i.e., Transportadora and Holcim Argentina go up and down completely randomly.
Pair Corralation between Transportadora and Holcim Argentina
Assuming the 90 days trading horizon Transportadora de Gas is expected to generate 1.39 times more return on investment than Holcim Argentina. However, Transportadora is 1.39 times more volatile than Holcim Argentina SA. It trades about 0.09 of its potential returns per unit of risk. Holcim Argentina SA is currently generating about 0.01 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 | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Transportadora de Gas vs. Holcim Argentina SA
Performance |
| Timeline |
| Transportadora de Gas |
| Holcim Argentina |
Transportadora and Holcim Argentina Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Transportadora and Holcim Argentina
The main advantage of trading using opposite Transportadora and Holcim Argentina positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transportadora position performs unexpectedly, Holcim Argentina 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 Holcim Argentina will offset losses from the drop in Holcim Argentina's long position.| Transportadora vs. Agrometal SAI | Transportadora vs. Harmony Gold Mining | Transportadora vs. Compania de Transporte | Transportadora vs. United States Steel |
| Holcim Argentina vs. Agrometal SAI | Holcim Argentina vs. Compania de Transporte | Holcim Argentina vs. Telecom Argentina | Holcim Argentina vs. Transportadora de Gas |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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