Correlation Between Celulosa Argentina and Loma Negra
Can any of the company-specific risk be diversified away by investing in both Celulosa Argentina and Loma Negra 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 Celulosa Argentina and Loma Negra into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Celulosa Argentina SA and Loma Negra Compania, you can compare the effects of market volatilities on Celulosa Argentina and Loma Negra 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 Celulosa Argentina with a short position of Loma Negra. Check out your portfolio center. Please also check ongoing floating volatility patterns of Celulosa Argentina and Loma Negra.
Diversification Opportunities for Celulosa Argentina and Loma Negra
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Celulosa and Loma is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Celulosa Argentina SA and Loma Negra Compania in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Loma Negra Compania and Celulosa Argentina 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 Celulosa Argentina SA are associated (or correlated) with Loma Negra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Loma Negra Compania has no effect on the direction of Celulosa Argentina i.e., Celulosa Argentina and Loma Negra go up and down completely randomly.
Pair Corralation between Celulosa Argentina and Loma Negra
Assuming the 90 days trading horizon Celulosa Argentina SA is expected to generate 17.48 times more return on investment than Loma Negra. However, Celulosa Argentina is 17.48 times more volatile than Loma Negra Compania. It trades about 0.07 of its potential returns per unit of risk. Loma Negra Compania is currently generating about 0.14 per unit of risk. If you would invest 22,200 in Celulosa Argentina SA on February 3, 2024 and sell it today you would earn a total of 58,450 from holding Celulosa Argentina SA or generate 263.29% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Celulosa Argentina SA vs. Loma Negra Compania
Performance |
Timeline |
Celulosa Argentina |
Loma Negra Compania |
Celulosa Argentina and Loma Negra Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Celulosa Argentina and Loma Negra
The main advantage of trading using opposite Celulosa Argentina and Loma Negra positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Celulosa Argentina position performs unexpectedly, Loma Negra 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 Loma Negra will offset losses from the drop in Loma Negra's long position.Celulosa Argentina vs. Agrometal SAI | Celulosa Argentina vs. Harmony Gold Mining | Celulosa Argentina vs. Compania de Transporte | Celulosa Argentina vs. Transportadora de Gas |
Loma Negra vs. Transportadora de Gas | Loma Negra vs. Agrometal SAI | Loma Negra vs. Compania de Transporte |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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