Correlation Between Agrometal SAI and Compania

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

By analyzing existing cross correlation between Agrometal SAI and Compania de Transporte, you can compare the effects of market volatilities on Agrometal SAI and Compania 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 Compania. Check out your portfolio center. Please also check ongoing floating volatility patterns of Agrometal SAI and Compania.

Diversification Opportunities for Agrometal SAI and Compania

0.67

Correlation Coefficient

Agrometal SAI  Compania

Poor diversification

The 3 months correlation between Agrometal and Compania is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Agrometal SAI and Compania de Transporte in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compania de Transporte 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 Compania. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compania de Transporte has no effect on the direction of Agrometal SAI i.e., Agrometal SAI and Compania go up and down completely randomly.

Pair Corralation between Agrometal SAI and Compania

Assuming the 90 days trading horizon Agrometal SAI is expected to generate 1.85 times less return on investment than Compania. In addition to that, Agrometal SAI is 1.52 times more volatile than Compania de Transporte. It trades about 0.07 of its total potential returns per unit of risk. Compania de Transporte is currently generating about 0.2 per unit of volatility. If you would invest  5,110  in Compania de Transporte on February 6, 2024 and sell it today you would earn a total of  142,040  from holding Compania de Transporte or generate 2779.65% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Agrometal SAI  vs.  Compania de Transporte

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.

Compania de Transporte

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Compania de Transporte are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Compania may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with Agrometal SAI and Compania

The main advantage of trading using opposite Agrometal SAI and Compania positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Agrometal SAI position performs unexpectedly, Compania 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 Compania will offset losses from the drop in Compania's long position.

The idea behind Agrometal SAI and Compania de Transporte 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..