Correlation Between Molinos Agro and Capex SA

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

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

Diversification Opportunities for Molinos Agro and Capex SA

0.83

Correlation Coefficient

Molinos Agro  Capex SA

Very poor diversification

The 3 months correlation between Molinos and Capex is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Molinos Agro SA and Capex SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capex SA and Molinos Agro 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 Molinos Agro SA are associated (or correlated) with Capex SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capex SA has no effect on the direction of Molinos Agro i.e., Molinos Agro and Capex SA go up and down completely randomly.

Pair Corralation between Molinos Agro and Capex SA

Assuming the 90 days trading horizon Molinos Agro SA is expected to generate 1.0 times more return on investment than Capex SA. However, Molinos Agro is 1.0 times more volatile than Capex SA. It trades about -0.1 of its potential returns per unit of risk. Capex SA is currently generating about -0.14 per unit of risk. If you would invest  3,160,000  in Molinos Agro SA on December 30, 2024 and sell it today you would lose (812,500) from holding Molinos Agro SA or give up 25.71% of portfolio value over 90 days.

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

Molinos Agro SA  vs.  Capex SA

Molinos Agro SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Molinos Agro SA 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.

Capex SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Capex SA 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.

Pair Trading with Molinos Agro and Capex SA

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

The idea behind Molinos Agro SA and Capex 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 Stocks Directory module to find actively traded stocks across global markets.