Correlation Between Molinos Agro and Inversora Juramento

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

Diversification Opportunities for Molinos Agro and Inversora Juramento

0.9

Correlation Coefficient

Molinos Agro  Inversora Juramento

Almost no diversification

The 3 months correlation between Molinos and Inversora is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Molinos Agro SA and Inversora Juramento SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inversora Juramento 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 Inversora Juramento. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inversora Juramento has no effect on the direction of Molinos Agro i.e., Molinos Agro and Inversora Juramento go up and down completely randomly.

Pair Corralation between Molinos Agro and Inversora Juramento

Assuming the 90 days trading horizon Molinos Agro SA is expected to generate 1.02 times more return on investment than Inversora Juramento. However, Molinos Agro is 1.02 times more volatile than Inversora Juramento SA. It trades about 0.13 of its potential returns per unit of risk. Inversora Juramento SA is currently generating about 0.12 per unit of risk. If you would invest  1,867,500  in Molinos Agro SA on September 1, 2024 and sell it today you would earn a total of  332,500  from holding Molinos Agro SA or generate 17.8% return on investment over 90 days.

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

Molinos Agro SA  vs.  Inversora Juramento SA

Molinos Agro SA

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Molinos Agro SA are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Molinos Agro sustained solid returns over the last few months and may actually be approaching a breakup point.

Inversora Juramento

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Inversora Juramento SA are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Inversora Juramento sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Molinos Agro and Inversora Juramento

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

The idea behind Molinos Agro SA and Inversora Juramento 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.