Correlation Between Compania Introductora and Molinos Agro

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

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

Diversification Opportunities for Compania Introductora and Molinos Agro

0.22

Correlation Coefficient

Compania Introductora  Molinos Agro

Modest diversification

The 3 months correlation between Compania and Molinos is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Compania Introductora de and Molinos Agro SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Molinos Agro SA and Compania Introductora 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 Compania Introductora de are associated (or correlated) with Molinos Agro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Molinos Agro SA has no effect on the direction of Compania Introductora i.e., Compania Introductora and Molinos Agro go up and down completely randomly.

Pair Corralation between Compania Introductora and Molinos Agro

Assuming the 90 days trading horizon Compania Introductora de is expected to generate 1.37 times more return on investment than Molinos Agro. However, Compania Introductora is 1.37 times more volatile than Molinos Agro SA. It trades about -0.19 of its potential returns per unit of risk. Molinos Agro SA is currently generating about -0.67 per unit of risk. If you would invest  41,000  in Compania Introductora de on December 2, 2024 and sell it today you would lose (5,100) from holding Compania Introductora de or give up 12.44% of portfolio value over 90 days.

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

Compania Introductora de  vs.  Molinos Agro SA

Compania Introductora

Risk-Adjusted Performance

Very Weak

Over the last 90 days Compania Introductora de has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Molinos Agro SA

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Molinos Agro SA are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Molinos Agro may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Compania Introductora and Molinos Agro

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

The idea behind Compania Introductora de and Molinos Agro 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 Transaction History module to view history of all your transactions and understand their impact on performance.