Correlation Between Garovaglio and Distribuidora

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

By analyzing existing cross correlation between Garovaglio y Zorraquin and Distribuidora de Gas, you can compare the effects of market volatilities on Garovaglio and Distribuidora 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 Garovaglio with a short position of Distribuidora. Check out your portfolio center. Please also check ongoing floating volatility patterns of Garovaglio and Distribuidora.

Diversification Opportunities for Garovaglio and Distribuidora

0.69

Correlation Coefficient

Garovaglio  Distribuidora

Poor diversification

The 3 months correlation between Garovaglio and Distribuidora is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Garovaglio y Zorraquin and Distribuidora de Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Distribuidora de Gas and Garovaglio 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 Garovaglio y Zorraquin are associated (or correlated) with Distribuidora. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Distribuidora de Gas has no effect on the direction of Garovaglio i.e., Garovaglio and Distribuidora go up and down completely randomly.

Pair Corralation between Garovaglio and Distribuidora

Assuming the 90 days trading horizon Garovaglio is expected to generate 1.49 times less return on investment than Distribuidora. In addition to that, Garovaglio is 1.33 times more volatile than Distribuidora de Gas. It trades about 0.14 of its total potential returns per unit of risk. Distribuidora de Gas is currently generating about 0.27 per unit of volatility. If you would invest  139,500  in Distribuidora de Gas on September 16, 2024 and sell it today you would earn a total of  85,000  from holding Distribuidora de Gas or generate 60.93% return on investment over 90 days.

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

Garovaglio y Zorraquin  vs.  Distribuidora de Gas

Garovaglio y Zorraquin

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Garovaglio y Zorraquin are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Garovaglio sustained solid returns over the last few months and may actually be approaching a breakup point.

Distribuidora de Gas

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Distribuidora de Gas are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental drivers, Distribuidora sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Garovaglio and Distribuidora

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

The idea behind Garovaglio y Zorraquin and Distribuidora 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.