Correlation Between ACS Actividades and ENCE Energa
Can any of the company-specific risk be diversified away by investing in both ACS Actividades and ENCE Energa 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 ACS Actividades and ENCE Energa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ACS Actividades de and ENCE Energa y, you can compare the effects of market volatilities on ACS Actividades and ENCE Energa 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 ACS Actividades with a short position of ENCE Energa. Check out your portfolio center. Please also check ongoing floating volatility patterns of ACS Actividades and ENCE Energa.
Diversification Opportunities for ACS Actividades and ENCE Energa
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between ACS and ENCE is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding ACS Actividades de and ENCE Energa y in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ENCE Energa y and ACS Actividades 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 ACS Actividades de are associated (or correlated) with ENCE Energa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ENCE Energa y has no effect on the direction of ACS Actividades i.e., ACS Actividades and ENCE Energa go up and down completely randomly.
Pair Corralation between ACS Actividades and ENCE Energa
Assuming the 90 days trading horizon ACS Actividades de is expected to under-perform the ENCE Energa. But the stock apears to be less risky and, when comparing its historical volatility, ACS Actividades de is 1.38 times less risky than ENCE Energa. The stock trades about -0.03 of its potential returns per unit of risk. The ENCE Energa y is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 283.00 in ENCE Energa y on August 28, 2024 and sell it today you would earn a total of 3.00 from holding ENCE Energa y or generate 1.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ACS Actividades de vs. ENCE Energa y
Performance |
| Timeline |
| ACS Actividades de |
| ENCE Energa y |
ACS Actividades and ENCE Energa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ACS Actividades and ENCE Energa
The main advantage of trading using opposite ACS Actividades and ENCE Energa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ACS Actividades position performs unexpectedly, ENCE Energa 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 ENCE Energa will offset losses from the drop in ENCE Energa's long position.The idea behind ACS Actividades de and ENCE Energa y 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.| ENCE Energa vs. Acerinox | ENCE Energa vs. CIE Automotive SA | ENCE Energa vs. Mapfre | ENCE Energa vs. ArcelorMittal SA |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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