Correlation Between Compania and Grimoldi
Can any of the company-specific risk be diversified away by investing in both Compania and Grimoldi 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 Grimoldi 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 Grimoldi SA, you can compare the effects of market volatilities on Compania and Grimoldi 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 Grimoldi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compania and Grimoldi.
Diversification Opportunities for Compania and Grimoldi
Very weak diversification
The 3 months correlation between Compania and Grimoldi is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Compania de Transporte and Grimoldi SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grimoldi 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 Grimoldi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grimoldi SA has no effect on the direction of Compania i.e., Compania and Grimoldi go up and down completely randomly.
Pair Corralation between Compania and Grimoldi
Assuming the 90 days trading horizon Compania de Transporte is expected to generate 2.41 times more return on investment than Grimoldi. However, Compania is 2.41 times more volatile than Grimoldi SA. It trades about 0.33 of its potential returns per unit of risk. Grimoldi SA is currently generating about 0.37 per unit of risk. If you would invest 221,500 in Compania de Transporte on September 19, 2024 and sell it today you would earn a total of 82,000 from holding Compania de Transporte or generate 37.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Compania de Transporte vs. Grimoldi SA
Performance |
| Timeline |
| Compania de Transporte |
| Grimoldi SA |
Compania and Grimoldi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Compania and Grimoldi
The main advantage of trading using opposite Compania and Grimoldi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compania position performs unexpectedly, Grimoldi 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 Grimoldi will offset losses from the drop in Grimoldi's long position.| Compania vs. Edesa Holding SA | Compania vs. Vista Energy, SAB | Compania vs. United States Steel | Compania vs. Pfizer Inc |
| Grimoldi vs. Harmony Gold Mining | Grimoldi vs. Compania de Transporte | Grimoldi vs. United States Steel | Grimoldi 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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