Correlation Between YPF SA and Celulosa Argentina

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

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

Diversification Opportunities for YPF SA and Celulosa Argentina

0.52

Correlation Coefficient

YPF SA  Celulosa Argentina

Very weak diversification

The 3 months correlation between YPF and Celulosa is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding YPF SA D and Celulosa Argentina SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Celulosa Argentina and YPF 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 YPF SA D are associated (or correlated) with Celulosa Argentina. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Celulosa Argentina has no effect on the direction of YPF SA i.e., YPF SA and Celulosa Argentina go up and down completely randomly.

Pair Corralation between YPF SA and Celulosa Argentina

Assuming the 90 days trading horizon YPF SA is expected to generate 2.73 times less return on investment than Celulosa Argentina. In addition to that, YPF SA is 1.08 times more volatile than Celulosa Argentina SA. It trades about 0.07 of its total potential returns per unit of risk. Celulosa Argentina SA is currently generating about 0.21 per unit of volatility. If you would invest  65,700  in Celulosa Argentina SA on January 28, 2024 and sell it today you would earn a total of  7,050  from holding Celulosa Argentina SA or generate 10.73% return on investment over 90 days.

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

YPF SA D  vs.  Celulosa Argentina SA

YPF SA D

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in YPF SA D are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, YPF SA may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Celulosa Argentina

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Celulosa Argentina SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with YPF SA and Celulosa Argentina

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

The idea behind YPF SA D and Celulosa Argentina SA 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 CEOs Directory module to screen CEOs from public companies around the world.