Correlation Between Agrometal SAI and Distribuidora

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

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

Diversification Opportunities for Agrometal SAI and Distribuidora

0.68

Correlation Coefficient

Agrometal SAI  Distribuidora

Poor diversification

The 3 months correlation between Agrometal and Distribuidora is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Agrometal SAI and Distribuidora de Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Distribuidora de Gas 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 Distribuidora. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Distribuidora de Gas has no effect on the direction of Agrometal SAI i.e., Agrometal SAI and Distribuidora go up and down completely randomly.

Pair Corralation between Agrometal SAI and Distribuidora

Assuming the 90 days trading horizon Agrometal SAI is expected to generate 1.63 times less return on investment than Distribuidora. In addition to that, Agrometal SAI is 1.55 times more volatile than Distribuidora de Gas. It trades about 0.06 of its total potential returns per unit of risk. Distribuidora de Gas is currently generating about 0.14 per unit of volatility. If you would invest  17,000  in Distribuidora de Gas on December 4, 2024 and sell it today you would earn a total of  150,000  from holding Distribuidora de Gas or generate 882.35% 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.  Distribuidora de Gas

Agrometal SAI

Risk-Adjusted Performance

Very Weak

Over the last 90 days Agrometal SAI 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 April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Distribuidora de Gas

Risk-Adjusted Performance

Very Weak

Over the last 90 days Distribuidora de Gas 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 fundamental drivers remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Agrometal SAI and Distribuidora

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

The idea behind Agrometal SAI and Distribuidora de Gas 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.