Correlation Between Ebro Foods and Central Asia
Can any of the company-specific risk be diversified away by investing in both Ebro Foods and Central Asia 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 Ebro Foods and Central Asia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ebro Foods and Central Asia Metals, you can compare the effects of market volatilities on Ebro Foods and Central Asia 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 Ebro Foods with a short position of Central Asia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ebro Foods and Central Asia.
Diversification Opportunities for Ebro Foods and Central Asia
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Ebro and Central is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Ebro Foods and Central Asia Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Central Asia Metals and Ebro Foods 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 Ebro Foods are associated (or correlated) with Central Asia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Central Asia Metals has no effect on the direction of Ebro Foods i.e., Ebro Foods and Central Asia go up and down completely randomly.
Pair Corralation between Ebro Foods and Central Asia
Assuming the 90 days trading horizon Ebro Foods is expected to generate 0.66 times more return on investment than Central Asia. However, Ebro Foods is 1.5 times less risky than Central Asia. It trades about -0.07 of its potential returns per unit of risk. Central Asia Metals is currently generating about -0.48 per unit of risk. If you would invest 1,614 in Ebro Foods on August 26, 2024 and sell it today you would lose (19.00) from holding Ebro Foods or give up 1.18% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ebro Foods vs. Central Asia Metals
Performance |
| Timeline |
| Ebro Foods |
| Central Asia Metals |
Ebro Foods and Central Asia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ebro Foods and Central Asia
The main advantage of trading using opposite Ebro Foods and Central Asia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ebro Foods position performs unexpectedly, Central Asia 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 Central Asia will offset losses from the drop in Central Asia's long position.| Ebro Foods vs. Samsung Electronics Co | Ebro Foods vs. Samsung Electronics Co | Ebro Foods vs. Hyundai Motor | Ebro Foods vs. Toyota Motor Corp |
| Central Asia vs. Spotify Technology SA | Central Asia vs. Sabien Technology Group | Central Asia vs. Vitec Software Group | Central Asia vs. Ebro Foods |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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