Correlation Between Compania and Aluar Aluminio
Can any of the company-specific risk be diversified away by investing in both Compania and Aluar Aluminio 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 Compania and Aluar Aluminio into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Compania de Transporte and Aluar Aluminio Argentino, you can compare the effects of market volatilities on Compania and Aluar Aluminio 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 Compania with a short position of Aluar Aluminio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compania and Aluar Aluminio.
Diversification Opportunities for Compania and Aluar Aluminio
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Compania and Aluar is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Compania de Transporte and Aluar Aluminio Argentino in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aluar Aluminio Argentino and Compania 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 Compania de Transporte are associated (or correlated) with Aluar Aluminio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aluar Aluminio Argentino has no effect on the direction of Compania i.e., Compania and Aluar Aluminio go up and down completely randomly.
Pair Corralation between Compania and Aluar Aluminio
Assuming the 90 days trading horizon Compania is expected to generate 1.37 times less return on investment than Aluar Aluminio. In addition to that, Compania is 1.07 times more volatile than Aluar Aluminio Argentino. It trades about 0.15 of its total potential returns per unit of risk. Aluar Aluminio Argentino is currently generating about 0.22 per unit of volatility. If you would invest 83,200 in Aluar Aluminio Argentino on August 30, 2024 and sell it today you would earn a total of 10,800 from holding Aluar Aluminio Argentino or generate 12.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Compania de Transporte vs. Aluar Aluminio Argentino
Performance |
| Timeline |
| Compania de Transporte |
| Aluar Aluminio Argentino |
Compania and Aluar Aluminio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Compania and Aluar Aluminio
The main advantage of trading using opposite Compania and Aluar Aluminio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compania position performs unexpectedly, Aluar Aluminio 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 Aluar Aluminio will offset losses from the drop in Aluar Aluminio's long position.| Compania vs. Pampa Energia SA | Compania vs. Vista Energy, SAB | Compania vs. United States Steel | Compania vs. Central Puerto SA |
| Aluar Aluminio vs. Telecom Argentina | Aluar Aluminio vs. Compania de Transporte | Aluar Aluminio vs. Agrometal SAI | Aluar Aluminio 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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