Correlation Between Agrometal SAI and Cresud SA

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

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

Diversification Opportunities for Agrometal SAI and Cresud SA

0.93

Correlation Coefficient

Agrometal SAI  Cresud SA

Almost no diversification

The 3 months correlation between Agrometal and Cresud is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Agrometal SAI and Cresud SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cresud SA 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 Cresud SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cresud SA has no effect on the direction of Agrometal SAI i.e., Agrometal SAI and Cresud SA go up and down completely randomly.

Pair Corralation between Agrometal SAI and Cresud SA

Assuming the 90 days trading horizon Agrometal SAI is expected to generate 15.51 times less return on investment than Cresud SA. In addition to that, Agrometal SAI is 1.38 times more volatile than Cresud SA. It trades about 0.01 of its total potential returns per unit of risk. Cresud SA is currently generating about 0.15 per unit of volatility. If you would invest  149,500  in Cresud SA on October 8, 2024 and sell it today you would earn a total of  10,000  from holding Cresud SA or generate 6.69% return on investment over 90 days.

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

Agrometal SAI  vs.  Cresud SA

Agrometal SAI

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Agrometal SAI are ranked lower than 12 (%) 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.

Cresud SA

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Cresud SA are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Cresud SA sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Agrometal SAI and Cresud SA

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

The idea behind Agrometal SAI and Cresud 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.

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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.