Correlation Between Molinos Agro and Transportadora

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

Diversification Opportunities for Molinos Agro and Transportadora

0.13

Correlation Coefficient

Molinos Agro  Transportadora

Average diversification

The 3 months correlation between Molinos and Transportadora is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Molinos Agro SA and Transportadora de Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transportadora de Gas 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 Transportadora. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transportadora de Gas has no effect on the direction of Molinos Agro i.e., Molinos Agro and Transportadora go up and down completely randomly.

Pair Corralation between Molinos Agro and Transportadora

Assuming the 90 days trading horizon Molinos Agro SA is expected to generate 1.51 times more return on investment than Transportadora. However, Molinos Agro is 1.51 times more volatile than Transportadora de Gas. It trades about 0.03 of its potential returns per unit of risk. Transportadora de Gas is currently generating about -0.08 per unit of risk. If you would invest  2,245,000  in Molinos Agro SA on December 1, 2024 and sell it today you would earn a total of  20,000  from holding Molinos Agro SA or generate 0.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Molinos Agro SA  vs.  Transportadora de Gas

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.

Transportadora de Gas

Risk-Adjusted Performance

Very Weak

Over the last 90 days Transportadora de Gas 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 fundamental drivers 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 Transportadora

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

The idea behind Molinos Agro SA and Transportadora de Gas 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.