Correlation Between Compania and Capex SA
Can any of the company-specific risk be diversified away by investing in both Compania and Capex SA 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 Capex SA 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 Capex SA, you can compare the effects of market volatilities on Compania and Capex SA 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 Capex SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compania and Capex SA.
Diversification Opportunities for Compania and Capex SA
Weak diversification
The 3 months correlation between Compania and Capex is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Compania de Transporte and Capex SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capex SA 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 Capex SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capex SA has no effect on the direction of Compania i.e., Compania and Capex SA go up and down completely randomly.
Pair Corralation between Compania and Capex SA
Assuming the 90 days trading horizon Compania is expected to generate 2.22 times less return on investment than Capex SA. But when comparing it to its historical volatility, Compania de Transporte is 1.09 times less risky than Capex SA. It trades about 0.24 of its potential returns per unit of risk. Capex SA is currently generating about 0.48 of returns per unit of risk over similar time horizon. If you would invest 619,000 in Capex SA on August 29, 2024 and sell it today you would earn a total of 281,000 from holding Capex SA or generate 45.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Compania de Transporte vs. Capex SA
Performance |
| Timeline |
| Compania de Transporte |
| Capex SA |
Compania and Capex SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Compania and Capex SA
The main advantage of trading using opposite Compania and Capex SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compania position performs unexpectedly, Capex SA 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 Capex SA will offset losses from the drop in Capex SA's long position.| Compania vs. Pampa Energia SA | Compania vs. Vista Energy, SAB | Compania vs. United States Steel | Compania vs. Central Puerto SA |
| Capex SA vs. Transportadora de Gas | Capex SA vs. Agrometal SAI | Capex SA vs. United States Steel | Capex SA vs. Compania de Transporte |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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