Correlation Between Vale SA and Central Puerto
Can any of the company-specific risk be diversified away by investing in both Vale SA and Central Puerto 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 Vale SA and Central Puerto into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vale SA and Central Puerto SA, you can compare the effects of market volatilities on Vale SA and Central Puerto 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 Vale SA with a short position of Central Puerto. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vale SA and Central Puerto.
Diversification Opportunities for Vale SA and Central Puerto
-0.83 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Vale and Central is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Vale SA and Central Puerto SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Central Puerto SA and Vale SA 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 Vale SA are associated (or correlated) with Central Puerto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Central Puerto SA has no effect on the direction of Vale SA i.e., Vale SA and Central Puerto go up and down completely randomly.
Pair Corralation between Vale SA and Central Puerto
Assuming the 90 days trading horizon Vale SA is expected to generate 0.41 times more return on investment than Central Puerto. However, Vale SA is 2.45 times less risky than Central Puerto. It trades about 0.21 of its potential returns per unit of risk. Central Puerto SA is currently generating about -0.05 per unit of risk. If you would invest 524,000 in Vale SA on November 2, 2024 and sell it today you would earn a total of 38,000 from holding Vale SA or generate 7.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Vale SA vs. Central Puerto SA
Performance |
| Timeline |
| Vale SA |
| Central Puerto SA |
Vale SA and Central Puerto Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vale SA and Central Puerto
The main advantage of trading using opposite Vale SA and Central Puerto positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vale SA position performs unexpectedly, Central Puerto 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 Central Puerto will offset losses from the drop in Central Puerto's long position.| Vale SA vs. BHP Group Limited | Vale SA vs. Rio Tinto PLC | Vale SA vs. Agrometal SAI | Vale SA vs. Grimoldi SA |
| Central Puerto vs. United States Steel | Central Puerto vs. Harmony Gold Mining | Central Puerto vs. Telecom Argentina | Central Puerto vs. Agrometal SAI |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
Other Complementary Tools
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device |