Correlation Between Molinos Agro and Compania Introductora

Can any of the company-specific risk be diversified away by investing in both Molinos Agro and Compania Introductora 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 Compania Introductora 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 Compania Introductora de, you can compare the effects of market volatilities on Molinos Agro and Compania Introductora 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 Compania Introductora. Check out your portfolio center. Please also check ongoing floating volatility patterns of Molinos Agro and Compania Introductora.

Diversification Opportunities for Molinos Agro and Compania Introductora

0.61

Correlation Coefficient

Molinos Agro  Compania Introductora

Poor diversification

The 3 months correlation between Molinos and Compania is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Molinos Agro SA and Compania Introductora de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compania Introductora 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 Compania Introductora. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compania Introductora has no effect on the direction of Molinos Agro i.e., Molinos Agro and Compania Introductora go up and down completely randomly.

Pair Corralation between Molinos Agro and Compania Introductora

Assuming the 90 days trading horizon Molinos Agro SA is expected to under-perform the Compania Introductora. In addition to that, Molinos Agro is 1.28 times more volatile than Compania Introductora de. It trades about -0.1 of its total potential returns per unit of risk. Compania Introductora de is currently generating about -0.02 per unit of volatility. If you would invest  41,100  in Compania Introductora de on December 29, 2024 and sell it today you would lose (2,900) from holding Compania Introductora de or give up 7.06% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.36%
Values	Daily Returns

Molinos Agro SA  vs.  Compania Introductora de

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.

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 somewhat strong basic indicators, Compania Introductora is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Molinos Agro and Compania Introductora

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

The idea behind Molinos Agro SA and Compania Introductora de 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.

Check out your portfolio center.

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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..