Correlation Between Transportadora and Loma Negra
Can any of the company-specific risk be diversified away by investing in both Transportadora and Loma Negra 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 Loma Negra 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 Loma Negra Compania, you can compare the effects of market volatilities on Transportadora and Loma Negra 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 Loma Negra. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transportadora and Loma Negra.
Diversification Opportunities for Transportadora and Loma Negra
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Transportadora and Loma is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Transportadora de Gas and Loma Negra Compania in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Loma Negra Compania 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 Loma Negra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Loma Negra Compania has no effect on the direction of Transportadora i.e., Transportadora and Loma Negra go up and down completely randomly.
Pair Corralation between Transportadora and Loma Negra
Assuming the 90 days trading horizon Transportadora de Gas is expected to generate 1.28 times more return on investment than Loma Negra. However, Transportadora is 1.28 times more volatile than Loma Negra Compania. It trades about 0.14 of its potential returns per unit of risk. Loma Negra Compania is currently generating about 0.13 per unit of risk. If you would invest 62,550 in Transportadora de Gas on August 27, 2024 and sell it today you would earn a total of 595,450 from holding Transportadora de Gas or generate 951.96% 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. Loma Negra Compania
Performance |
| Timeline |
| Transportadora de Gas |
| Loma Negra Compania |
Transportadora and Loma Negra Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Transportadora and Loma Negra
The main advantage of trading using opposite Transportadora and Loma Negra positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transportadora position performs unexpectedly, Loma Negra 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 Loma Negra will offset losses from the drop in Loma Negra's long position.| Transportadora vs. Harmony Gold Mining | Transportadora vs. Telecom Argentina | Transportadora vs. Compania de Transporte | Transportadora vs. United States Steel |
| Loma Negra vs. Transportadora de Gas | Loma Negra vs. Compania de Transporte | Loma Negra vs. Harmony Gold Mining | Loma Negra vs. United States Steel |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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