Correlation Between Banco De and Agrometal SAI
Can any of the company-specific risk be diversified away by investing in both Banco De and Agrometal SAI 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 Banco De and Agrometal SAI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Banco de Valores and Agrometal SAI, you can compare the effects of market volatilities on Banco De and Agrometal SAI 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 Banco De with a short position of Agrometal SAI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banco De and Agrometal SAI.
Diversification Opportunities for Banco De and Agrometal SAI
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Banco and Agrometal is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Banco de Valores and Agrometal SAI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agrometal SAI and Banco De 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 Banco de Valores are associated (or correlated) with Agrometal SAI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Agrometal SAI has no effect on the direction of Banco De i.e., Banco De and Agrometal SAI go up and down completely randomly.
Pair Corralation between Banco De and Agrometal SAI
Assuming the 90 days trading horizon Banco de Valores is expected to generate 0.3 times more return on investment than Agrometal SAI. However, Banco de Valores is 3.35 times less risky than Agrometal SAI. It trades about -0.16 of its potential returns per unit of risk. Agrometal SAI is currently generating about -0.06 per unit of risk. If you would invest 45,150 in Banco de Valores on November 2, 2024 and sell it today you would lose (1,550) from holding Banco de Valores or give up 3.43% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Banco de Valores vs. Agrometal SAI
Performance |
| Timeline |
| Banco de Valores |
| Agrometal SAI |
Banco De and Agrometal SAI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Banco De and Agrometal SAI
The main advantage of trading using opposite Banco De and Agrometal SAI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banco De position performs unexpectedly, Agrometal SAI 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 Agrometal SAI will offset losses from the drop in Agrometal SAI's long position.| Banco De vs. Harmony Gold Mining | Banco De vs. Agrometal SAI | Banco De vs. Transportadora de Gas | Banco De vs. Telecom Argentina |
| Agrometal SAI vs. Harmony Gold Mining | Agrometal SAI vs. Compania de Transporte | Agrometal SAI 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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