Correlation Between Inversora Juramento and Molinos Agro

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

By analyzing existing cross correlation between Inversora Juramento SA and Molinos Agro SA, you can compare the effects of market volatilities on Inversora Juramento and Molinos Agro 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 Inversora Juramento with a short position of Molinos Agro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Inversora Juramento and Molinos Agro.

Diversification Opportunities for Inversora Juramento and Molinos Agro

0.69

Correlation Coefficient

Inversora Juramento  Molinos Agro

Poor diversification

The 3 months correlation between Inversora and Molinos is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Inversora Juramento SA and Molinos Agro SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Molinos Agro SA and Inversora Juramento 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 Inversora Juramento SA are associated (or correlated) with Molinos Agro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Molinos Agro SA has no effect on the direction of Inversora Juramento i.e., Inversora Juramento and Molinos Agro go up and down completely randomly.

Pair Corralation between Inversora Juramento and Molinos Agro

Assuming the 90 days trading horizon Inversora Juramento SA is expected to generate 1.09 times more return on investment than Molinos Agro. However, Inversora Juramento is 1.09 times more volatile than Molinos Agro SA. It trades about 0.06 of its potential returns per unit of risk. Molinos Agro SA is currently generating about -0.1 per unit of risk. If you would invest  47,550  in Inversora Juramento SA on February 12, 2024 and sell it today you would earn a total of  1,600  from holding Inversora Juramento SA or generate 3.36% return on investment over 90 days.

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

Inversora Juramento SA  vs.  Molinos Agro SA

Inversora Juramento

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Inversora Juramento SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Inversora Juramento is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Molinos Agro SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Molinos Agro SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in June 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Inversora Juramento and Molinos Agro

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

The idea behind Inversora Juramento SA and Molinos Agro SA 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.

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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.