Can any of the company-specific risk be diversified away by investing in both Agrometal SAI and Carlos Casado 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 Agrometal SAI and Carlos Casado into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Agrometal SAI and Carlos Casado, you can compare the effects of market volatilities on Agrometal SAI and Carlos Casado 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 Agrometal SAI with a short position of Carlos Casado. Check out your portfolio center. Please also check ongoing floating volatility patterns of Agrometal SAI and Carlos Casado.
Diversification Opportunities for Agrometal SAI and Carlos Casado
The 3 months correlation between Agrometal and Carlos is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Agrometal SAI and Carlos Casado in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carlos Casado and Agrometal SAI 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 Agrometal SAI are associated (or correlated) with Carlos Casado. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carlos Casado has no effect on the direction of Agrometal SAI i.e., Agrometal SAI and Carlos Casado go up and down completely randomly.
Pair Corralation between Agrometal SAI and Carlos Casado
Assuming the 90 days trading horizon Agrometal SAI is expected to generate 1.85 times more return on investment than Carlos Casado. However, Agrometal SAI is 1.85 times more volatile than Carlos Casado. It trades about 0.15 of its potential returns per unit of risk. Carlos Casado is currently generating about 0.09 per unit of risk. If you would invest 5,380 in Agrometal SAI on March 6, 2024 and sell it today you would earn a total of 510.00 from holding Agrometal SAI or generate 9.48% return on investment over 90 days.
Compared to the overall equity markets, risk-adjusted returns on investments in Agrometal SAI are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Agrometal SAI sustained solid returns over the last few months and may actually be approaching a breakup point.
Compared to the overall equity markets, risk-adjusted returns on investments in Carlos Casado are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Carlos Casado sustained solid returns over the last few months and may actually be approaching a breakup point.