Correlation Between Construcciones and Corporacion Financiera
Can any of the company-specific risk be diversified away by investing in both Construcciones and Corporacion Financiera 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 Construcciones and Corporacion Financiera into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Construcciones y Auxiliar and Corporacion Financiera Alba, you can compare the effects of market volatilities on Construcciones and Corporacion Financiera 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 Construcciones with a short position of Corporacion Financiera. Check out your portfolio center. Please also check ongoing floating volatility patterns of Construcciones and Corporacion Financiera.
Diversification Opportunities for Construcciones and Corporacion Financiera
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Construcciones and Corporacion is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Construcciones y Auxiliar and Corporacion Financiera Alba in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Corporacion Financiera and Construcciones 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 Construcciones y Auxiliar are associated (or correlated) with Corporacion Financiera. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Corporacion Financiera has no effect on the direction of Construcciones i.e., Construcciones and Corporacion Financiera go up and down completely randomly.
Pair Corralation between Construcciones and Corporacion Financiera
Assuming the 90 days trading horizon Construcciones y Auxiliar is expected to generate 1.63 times more return on investment than Corporacion Financiera. However, Construcciones is 1.63 times more volatile than Corporacion Financiera Alba. It trades about -0.06 of its potential returns per unit of risk. Corporacion Financiera Alba is currently generating about -0.11 per unit of risk. If you would invest 3,440 in Construcciones y Auxiliar on August 31, 2024 and sell it today you would lose (180.00) from holding Construcciones y Auxiliar or give up 5.23% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Construcciones y Auxiliar vs. Corporacion Financiera Alba
Performance |
| Timeline |
| Construcciones y Auxiliar |
| Corporacion Financiera |
Construcciones and Corporacion Financiera Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Construcciones and Corporacion Financiera
The main advantage of trading using opposite Construcciones and Corporacion Financiera positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Construcciones position performs unexpectedly, Corporacion Financiera 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 Corporacion Financiera will offset losses from the drop in Corporacion Financiera's long position.| Construcciones vs. CIE Automotive SA | Construcciones vs. Talgo SA | Construcciones vs. Viscofan | Construcciones vs. Tecnicas Reunidas |
| Corporacion Financiera vs. Miquel y Costas | Corporacion Financiera vs. Grupo Catalana Occidente | Corporacion Financiera vs. Construcciones y Auxiliar | Corporacion Financiera vs. Prosegur |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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