Correlation Between Empresa Distribuidora and Agrometal SAI

Can any of the company-specific risk be diversified away by investing in both Empresa Distribuidora 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 Empresa Distribuidora and Agrometal SAI into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Empresa Distribuidora y and Agrometal SAI, you can compare the effects of market volatilities on Empresa Distribuidora 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 Empresa Distribuidora with a short position of Agrometal SAI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Empresa Distribuidora and Agrometal SAI.

Diversification Opportunities for Empresa Distribuidora and Agrometal SAI

0.78

Correlation Coefficient

Empresa Distribuidora  Agrometal SAI

Poor diversification

The 3 months correlation between Empresa and Agrometal is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Empresa Distribuidora y and Agrometal SAI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agrometal SAI and Empresa Distribuidora 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 Empresa Distribuidora y 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 Empresa Distribuidora i.e., Empresa Distribuidora and Agrometal SAI go up and down completely randomly.

Pair Corralation between Empresa Distribuidora and Agrometal SAI

Assuming the 90 days trading horizon Empresa Distribuidora y is expected to generate 1.22 times more return on investment than Agrometal SAI. However, Empresa Distribuidora is 1.22 times more volatile than Agrometal SAI. It trades about 0.21 of its potential returns per unit of risk. Agrometal SAI is currently generating about 0.01 per unit of risk. If you would invest  89,490  in Empresa Distribuidora y on February 16, 2024 and sell it today you would earn a total of  14,995  from holding Empresa Distribuidora y or generate 16.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.45%
Values	Daily Returns

Empresa Distribuidora y  vs.  Agrometal SAI

Empresa Distribuidora

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Empresa Distribuidora y are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Empresa Distribuidora is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Agrometal SAI

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Agrometal SAI has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Empresa Distribuidora and Agrometal SAI

The main advantage of trading using opposite Empresa Distribuidora and Agrometal SAI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Empresa Distribuidora 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.

The idea behind Empresa Distribuidora y and Agrometal SAI 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.

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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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.