Correlation Between Molinos Agro and Morixe Hermanos

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

Diversification Opportunities for Molinos Agro and Morixe Hermanos

0.86

Correlation Coefficient

Molinos Agro  Morixe Hermanos

Very poor diversification

The 3 months correlation between Molinos and Morixe is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Molinos Agro SA and Morixe Hermanos SACI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Morixe Hermanos SACI 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 Morixe Hermanos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Morixe Hermanos SACI has no effect on the direction of Molinos Agro i.e., Molinos Agro and Morixe Hermanos go up and down completely randomly.

Pair Corralation between Molinos Agro and Morixe Hermanos

Assuming the 90 days trading horizon Molinos Agro SA is expected to generate 1.02 times more return on investment than Morixe Hermanos. However, Molinos Agro is 1.02 times more volatile than Morixe Hermanos SACI. It trades about 0.28 of its potential returns per unit of risk. Morixe Hermanos SACI is currently generating about 0.08 per unit of risk. If you would invest  1,782,500  in Molinos Agro SA on October 10, 2024 and sell it today you would earn a total of  1,622,500  from holding Molinos Agro SA or generate 91.02% return on investment over 90 days.

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

Molinos Agro SA  vs.  Morixe Hermanos SACI

Molinos Agro SA

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Molinos Agro SA are ranked lower than 22 (%) 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.

Morixe Hermanos SACI

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Morixe Hermanos SACI are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Morixe Hermanos sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Molinos Agro and Morixe Hermanos

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

The idea behind Molinos Agro SA and Morixe Hermanos SACI 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.