Correlation Between Cresud SACIF and Petrokent Turizm

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

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

Diversification Opportunities for Cresud SACIF and Petrokent Turizm

0.38

Correlation Coefficient

Cresud SACIF  Petrokent Turizm

Weak diversification

The 3 months correlation between Cresud and Petrokent is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Cresud SACIF y and Petrokent Turizm AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Petrokent Turizm and Cresud SACIF 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 SACIF y are associated (or correlated) with Petrokent Turizm. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Petrokent Turizm has no effect on the direction of Cresud SACIF i.e., Cresud SACIF and Petrokent Turizm go up and down completely randomly.

Pair Corralation between Cresud SACIF and Petrokent Turizm

Assuming the 90 days horizon Cresud SACIF y is expected to generate 1.06 times more return on investment than Petrokent Turizm. However, Cresud SACIF is 1.06 times more volatile than Petrokent Turizm AS. It trades about 0.25 of its potential returns per unit of risk. Petrokent Turizm AS is currently generating about 0.11 per unit of risk. If you would invest  854.00  in Cresud SACIF y on October 4, 2024 and sell it today you would earn a total of  484.00  from holding Cresud SACIF y or generate 56.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

Cresud SACIF y  vs.  Petrokent Turizm AS

Cresud SACIF y

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Cresud SACIF y are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, Cresud SACIF showed solid returns over the last few months and may actually be approaching a breakup point.

Petrokent Turizm

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Petrokent Turizm AS are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent forward indicators, Petrokent Turizm demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cresud SACIF and Petrokent Turizm

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

The idea behind Cresud SACIF y and Petrokent Turizm AS 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.