Correlation Between Mirgor SA and Ledesma SAAI

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

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

Diversification Opportunities for Mirgor SA and Ledesma SAAI

0.86

Correlation Coefficient

Mirgor SA  Ledesma SAAI

Very poor diversification

The 3 months correlation between Mirgor and Ledesma is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Mirgor SA and Ledesma SAAI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ledesma SAAI and Mirgor SA 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 Mirgor SA are associated (or correlated) with Ledesma SAAI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ledesma SAAI has no effect on the direction of Mirgor SA i.e., Mirgor SA and Ledesma SAAI go up and down completely randomly.

Pair Corralation between Mirgor SA and Ledesma SAAI

Assuming the 90 days trading horizon Mirgor SA is expected to generate 1.33 times less return on investment than Ledesma SAAI. But when comparing it to its historical volatility, Mirgor SA is 1.59 times less risky than Ledesma SAAI. It trades about 0.18 of its potential returns per unit of risk. Ledesma SAAI is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  111,991  in Ledesma SAAI on September 15, 2024 and sell it today you would earn a total of  27,009  from holding Ledesma SAAI or generate 24.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.44%
Values	Daily Returns

Mirgor SA  vs.  Ledesma SAAI

Mirgor SA

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Mirgor SA are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Mirgor SA sustained solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with Mirgor SA and Ledesma SAAI

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

The idea behind Mirgor SA and Ledesma SAAI 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 Transaction History module to view history of all your transactions and understand their impact on performance.