Correlation Between Dycasa SA and Distribuidora

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

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

Diversification Opportunities for Dycasa SA and Distribuidora

0.9

Correlation Coefficient

Dycasa SA  Distribuidora

Almost no diversification

The 3 months correlation between Dycasa and Distribuidora is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Dycasa SA 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 Dycasa 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 Dycasa SA 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 Dycasa SA i.e., Dycasa SA and Distribuidora go up and down completely randomly.

Pair Corralation between Dycasa SA and Distribuidora

Assuming the 90 days trading horizon Dycasa SA is expected to generate 2.53 times more return on investment than Distribuidora. However, Dycasa SA is 2.53 times more volatile than Distribuidora de Gas. It trades about 0.23 of its potential returns per unit of risk. Distribuidora de Gas is currently generating about 0.25 per unit of risk. If you would invest  41,450  in Dycasa SA on September 3, 2024 and sell it today you would earn a total of  54,050  from holding Dycasa SA or generate 130.4% return on investment over 90 days.

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

Dycasa SA  vs.  Distribuidora de Gas

Dycasa SA

Risk-Adjusted Performance

18 of 100

Solid

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

Distribuidora de Gas

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Distribuidora de Gas are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental drivers, Distribuidora sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dycasa SA and Distribuidora

The main advantage of trading using opposite Dycasa SA and Distribuidora positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dycasa SA 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 Dycasa SA 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.