Correlation Between Grupo Supervielle and Laboratorios Richmond

Can any of the company-specific risk be diversified away by investing in both Grupo Supervielle and Laboratorios Richmond 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 Laboratorios Richmond 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 Laboratorios Richmond SACIF, you can compare the effects of market volatilities on Grupo Supervielle and Laboratorios Richmond 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 Laboratorios Richmond. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grupo Supervielle and Laboratorios Richmond.

Diversification Opportunities for Grupo Supervielle and Laboratorios Richmond

0.84

Correlation Coefficient

Grupo Supervielle  Laboratorios Richmond

Very poor diversification

The 3 months correlation between Grupo and Laboratorios is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Supervielle SA and Laboratorios Richmond SACIF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Laboratorios Richmond 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 Laboratorios Richmond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Laboratorios Richmond has no effect on the direction of Grupo Supervielle i.e., Grupo Supervielle and Laboratorios Richmond go up and down completely randomly.

Pair Corralation between Grupo Supervielle and Laboratorios Richmond

Assuming the 90 days trading horizon Grupo Supervielle is expected to generate 2.01 times less return on investment than Laboratorios Richmond. But when comparing it to its historical volatility, Grupo Supervielle SA is 1.76 times less risky than Laboratorios Richmond. It trades about 0.2 of its potential returns per unit of risk. Laboratorios Richmond SACIF is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  93,800  in Laboratorios Richmond SACIF on September 3, 2024 and sell it today you would earn a total of  85,700  from holding Laboratorios Richmond SACIF or generate 91.36% return on investment over 90 days.

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

Grupo Supervielle SA  vs.  Laboratorios Richmond SACIF

Grupo Supervielle

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Grupo Supervielle SA are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Grupo Supervielle sustained solid returns over the last few months and may actually be approaching a breakup point.

Laboratorios Richmond

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Laboratorios Richmond SACIF are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Laboratorios Richmond sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Grupo Supervielle and Laboratorios Richmond

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

The idea behind Grupo Supervielle SA and Laboratorios Richmond SACIF 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.