Correlation Between Cresud SA and Agrometal SAI

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

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

Diversification Opportunities for Cresud SA and Agrometal SAI

0.67

Correlation Coefficient

Cresud SA  Agrometal SAI

Poor diversification

The 3 months correlation between Cresud and Agrometal is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Cresud SA and Agrometal SAI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agrometal SAI and Cresud SA 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 Cresud SA 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 Cresud SA i.e., Cresud SA and Agrometal SAI go up and down completely randomly.

Pair Corralation between Cresud SA and Agrometal SAI

Assuming the 90 days trading horizon Cresud SA is expected to generate 0.65 times more return on investment than Agrometal SAI. However, Cresud SA is 1.53 times less risky than Agrometal SAI. It trades about 0.12 of its potential returns per unit of risk. Agrometal SAI is currently generating about 0.06 per unit of risk. If you would invest  23,800  in Cresud SA on October 26, 2024 and sell it today you would earn a total of  132,700  from holding Cresud SA or generate 557.56% return on investment over 90 days.

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

Cresud SA  vs.  Agrometal SAI

Cresud SA

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Cresud SA are ranked lower than 15 (%) 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.

Agrometal SAI

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Agrometal SAI are ranked lower than 13 (%) 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.

Pair Trading with Cresud SA and Agrometal SAI

The main advantage of trading using opposite Cresud SA and Agrometal SAI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cresud SA 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 Cresud SA 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.