Correlation Between Ebro Foods and CeoTronics
Can any of the company-specific risk be diversified away by investing in both Ebro Foods and CeoTronics 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 CeoTronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ebro Foods SA and CeoTronics AG, you can compare the effects of market volatilities on Ebro Foods and CeoTronics 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 CeoTronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ebro Foods and CeoTronics.
Diversification Opportunities for Ebro Foods and CeoTronics
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ebro and CeoTronics is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Ebro Foods SA and CeoTronics AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CeoTronics AG 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 SA are associated (or correlated) with CeoTronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CeoTronics AG has no effect on the direction of Ebro Foods i.e., Ebro Foods and CeoTronics go up and down completely randomly.
Pair Corralation between Ebro Foods and CeoTronics
Assuming the 90 days horizon Ebro Foods is expected to generate 8.23 times less return on investment than CeoTronics. But when comparing it to its historical volatility, Ebro Foods SA is 1.75 times less risky than CeoTronics. It trades about 0.05 of its potential returns per unit of risk. CeoTronics AG is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 590.00 in CeoTronics AG on October 20, 2024 and sell it today you would earn a total of 25.00 from holding CeoTronics AG or generate 4.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 94.44% |
| Values | Daily Returns |
Ebro Foods SA vs. CeoTronics AG
Performance |
| Timeline |
| Ebro Foods SA |
| CeoTronics AG |
Ebro Foods and CeoTronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ebro Foods and CeoTronics
The main advantage of trading using opposite Ebro Foods and CeoTronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ebro Foods position performs unexpectedly, CeoTronics 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 CeoTronics will offset losses from the drop in CeoTronics' long position.| Ebro Foods vs. Pebblebrook Hotel Trust | Ebro Foods vs. INTERCONT HOTELS | Ebro Foods vs. NH HOTEL GROUP | Ebro Foods vs. Wayside Technology Group |
| CeoTronics vs. MTY Food Group | CeoTronics vs. LIFEWAY FOODS | CeoTronics vs. Ebro Foods SA | CeoTronics vs. National Beverage Corp |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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