Correlation Between Ledesma SAAI and Molinos Juan

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

By analyzing existing cross correlation between Ledesma SAAI and Molinos Juan Semino, you can compare the effects of market volatilities on Ledesma SAAI and Molinos Juan 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 Ledesma SAAI with a short position of Molinos Juan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ledesma SAAI and Molinos Juan.

Diversification Opportunities for Ledesma SAAI and Molinos Juan

0.67

Correlation Coefficient

Ledesma SAAI  Molinos Juan

Poor diversification

The 3 months correlation between Ledesma and Molinos is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Ledesma SAAI and Molinos Juan Semino in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Molinos Juan Semino and Ledesma SAAI 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 Ledesma SAAI are associated (or correlated) with Molinos Juan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Molinos Juan Semino has no effect on the direction of Ledesma SAAI i.e., Ledesma SAAI and Molinos Juan go up and down completely randomly.

Pair Corralation between Ledesma SAAI and Molinos Juan

Assuming the 90 days trading horizon Ledesma SAAI is expected to generate 5.5 times less return on investment than Molinos Juan. But when comparing it to its historical volatility, Ledesma SAAI is 1.99 times less risky than Molinos Juan. It trades about 0.17 of its potential returns per unit of risk. Molinos Juan Semino is currently generating about 0.48 of returns per unit of risk over similar time horizon. If you would invest  11,450  in Molinos Juan Semino on September 13, 2024 and sell it today you would earn a total of  5,700  from holding Molinos Juan Semino or generate 49.78% return on investment over 90 days.

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

Ledesma SAAI  vs.  Molinos Juan Semino

Ledesma SAAI

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ledesma SAAI are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Ledesma SAAI sustained solid returns over the last few months and may actually be approaching a breakup point.

Molinos Juan Semino

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Molinos Juan Semino are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Molinos Juan sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ledesma SAAI and Molinos Juan

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

The idea behind Ledesma SAAI and Molinos Juan Semino 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.