Correlation Between Grupo Supervielle and Cresud SA

Can any of the company-specific risk be diversified away by investing in both Grupo Supervielle and Cresud SA 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 Grupo Supervielle and Cresud SA into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Grupo Supervielle and Cresud SA

0.85

Correlation Coefficient

Grupo Supervielle  Cresud SA

Very poor diversification

The 3 months correlation between Grupo and Cresud is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Supervielle SA and Cresud SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cresud SA and Grupo Supervielle 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 Grupo Supervielle SA are associated (or correlated) with Cresud SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cresud SA has no effect on the direction of Grupo Supervielle i.e., Grupo Supervielle and Cresud SA go up and down completely randomly.

Pair Corralation between Grupo Supervielle and Cresud SA

Assuming the 90 days trading horizon Grupo Supervielle SA is expected to generate 1.71 times more return on investment than Cresud SA. However, Grupo Supervielle is 1.71 times more volatile than Cresud SA. It trades about 0.02 of its potential returns per unit of risk. Cresud SA is currently generating about 0.01 per unit of risk. If you would invest  357,500  in Grupo Supervielle SA on December 30, 2024 and sell it today you would lose (2,000) from holding Grupo Supervielle SA or give up 0.56% of portfolio value over 90 days.

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

Grupo Supervielle SA  vs.  Cresud SA

Grupo Supervielle

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Grupo Supervielle SA are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Grupo Supervielle is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Cresud SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cresud SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Cresud SA is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Grupo Supervielle and Cresud SA

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

The idea behind Grupo Supervielle SA and Cresud 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.