Correlation Between YPF Sociedad and NowVertical

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

By analyzing existing cross correlation between YPF Sociedad Anonima and NowVertical Group, you can compare the effects of market volatilities on YPF Sociedad and NowVertical 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 YPF Sociedad with a short position of NowVertical. Check out your portfolio center. Please also check ongoing floating volatility patterns of YPF Sociedad and NowVertical.

Diversification Opportunities for YPF Sociedad and NowVertical

0.91

Correlation Coefficient

YPF Sociedad  NowVertical

Almost no diversification

The 3 months correlation between YPF and NowVertical is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding YPF Sociedad Anonima and NowVertical Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NowVertical Group and YPF Sociedad 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 YPF Sociedad Anonima are associated (or correlated) with NowVertical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NowVertical Group has no effect on the direction of YPF Sociedad i.e., YPF Sociedad and NowVertical go up and down completely randomly.

Pair Corralation between YPF Sociedad and NowVertical

Considering the 90-day investment horizon YPF Sociedad Anonima is expected to generate 0.46 times more return on investment than NowVertical. However, YPF Sociedad Anonima is 2.18 times less risky than NowVertical. It trades about 0.13 of its potential returns per unit of risk. NowVertical Group is currently generating about 0.0 per unit of risk. If you would invest  4,003  in YPF Sociedad Anonima on September 27, 2024 and sell it today you would earn a total of  276.00  from holding YPF Sociedad Anonima or generate 6.89% return on investment over 90 days.

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

YPF Sociedad Anonima  vs.  NowVertical Group

YPF Sociedad Anonima

Risk-Adjusted Performance

33 of 100

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in YPF Sociedad Anonima are ranked lower than 33 (%) of all global equities and portfolios over the last 90 days. Despite nearly conflicting basic indicators, YPF Sociedad reported solid returns over the last few months and may actually be approaching a breakup point.

NowVertical Group

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in NowVertical Group are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, NowVertical reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with YPF Sociedad and NowVertical

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

The idea behind YPF Sociedad Anonima and NowVertical Group 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.

Check out your portfolio center.

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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.