Correlation Between YPF Sociedad and Parex Resources
Can any of the company-specific risk be diversified away by investing in both YPF Sociedad and Parex Resources 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 YPF Sociedad and Parex Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between YPF Sociedad Anonima and Parex Resources, you can compare the effects of market volatilities on YPF Sociedad and Parex Resources 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 YPF Sociedad with a short position of Parex Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of YPF Sociedad and Parex Resources.
Diversification Opportunities for YPF Sociedad and Parex Resources
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between YPF and Parex is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding YPF Sociedad Anonima and Parex Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Parex Resources and YPF Sociedad 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 YPF Sociedad Anonima are associated (or correlated) with Parex Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Parex Resources has no effect on the direction of YPF Sociedad i.e., YPF Sociedad and Parex Resources go up and down completely randomly.
Pair Corralation between YPF Sociedad and Parex Resources
Considering the 90-day investment horizon YPF Sociedad Anonima is expected to generate 1.28 times more return on investment than Parex Resources. However, YPF Sociedad is 1.28 times more volatile than Parex Resources. It trades about 0.77 of its potential returns per unit of risk. Parex Resources is currently generating about 0.28 per unit of risk. If you would invest 2,551 in YPF Sociedad Anonima on August 29, 2024 and sell it today you would earn a total of 1,452 from holding YPF Sociedad Anonima or generate 56.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
YPF Sociedad Anonima vs. Parex Resources
Performance |
| Timeline |
| YPF Sociedad Anonima |
| Parex Resources |
YPF Sociedad and Parex Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with YPF Sociedad and Parex Resources
The main advantage of trading using opposite YPF Sociedad and Parex Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if YPF Sociedad position performs unexpectedly, Parex Resources 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 Parex Resources will offset losses from the drop in Parex Resources' long position.The idea behind YPF Sociedad Anonima and Parex Resources pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Parex Resources vs. Petroleo Brasileiro Petrobras | Parex Resources vs. Equinor ASA ADR | Parex Resources vs. Eni SpA ADR | Parex Resources vs. YPF Sociedad Anonima |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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