Correlation Between Pampa Energia and Nextgen Food

Can any of the company-specific risk be diversified away by investing in both Pampa Energia and Nextgen Food 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 Pampa Energia and Nextgen Food into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Pampa Energia and Nextgen Food

-0.4

Correlation Coefficient

Pampa Energia  Nextgen Food

Very good diversification

The 3 months correlation between Pampa and Nextgen is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Pampa Energia SA and Nextgen Food Robotics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nextgen Food Robotics and Pampa Energia 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 Pampa Energia SA are associated (or correlated) with Nextgen Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nextgen Food Robotics has no effect on the direction of Pampa Energia i.e., Pampa Energia and Nextgen Food go up and down completely randomly.

Pair Corralation between Pampa Energia and Nextgen Food

Considering the 90-day investment horizon Pampa Energia is expected to generate 5.83 times less return on investment than Nextgen Food. But when comparing it to its historical volatility, Pampa Energia SA is 8.89 times less risky than Nextgen Food. It trades about 0.18 of its potential returns per unit of risk. Nextgen Food Robotics is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  4.00  in Nextgen Food Robotics on October 10, 2024 and sell it today you would earn a total of  0.50  from holding Nextgen Food Robotics or generate 12.5% return on investment over 90 days.

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

Pampa Energia SA  vs.  Nextgen Food Robotics

Pampa Energia SA

Risk-Adjusted Performance

27 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Pampa Energia SA are ranked lower than 27 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting basic indicators, Pampa Energia displayed solid returns over the last few months and may actually be approaching a breakup point.

Nextgen Food Robotics

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Nextgen Food Robotics are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental drivers, Nextgen Food reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Pampa Energia and Nextgen Food

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

The idea behind Pampa Energia SA and Nextgen Food Robotics 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.