Correlation Between Compania and Agrometal SAI

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

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

Diversification Opportunities for Compania and Agrometal SAI

0.81

Correlation Coefficient

Compania  Agrometal SAI

Very poor diversification

The 3 months correlation between Compania and Agrometal is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Compania de Transporte and Agrometal SAI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agrometal SAI and Compania 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 Compania de Transporte 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 Compania i.e., Compania and Agrometal SAI go up and down completely randomly.

Pair Corralation between Compania and Agrometal SAI

Assuming the 90 days trading horizon Compania de Transporte is expected to generate 1.0 times more return on investment than Agrometal SAI. However, Compania de Transporte is 1.0 times less risky than Agrometal SAI. It trades about 0.07 of its potential returns per unit of risk. Agrometal SAI is currently generating about 0.02 per unit of risk. If you would invest  205,500  in Compania de Transporte on April 22, 2025 and sell it today you would earn a total of  27,500  from holding Compania de Transporte or generate 13.38% return on investment over 90 days.

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

Compania de Transporte  vs.  Agrometal SAI

Compania de Transporte

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Compania de Transporte are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Compania sustained solid returns over the last few months and may actually be approaching a breakup point.

Agrometal SAI

Risk-Adjusted Performance

Weak

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

Pair Trading with Compania and Agrometal SAI

The main advantage of trading using opposite Compania and Agrometal SAI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compania 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 Compania de Transporte 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.