Correlation Between Cellnex Telecom and Realia

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Can any of the company-specific risk be diversified away by investing in both Cellnex Telecom and Realia 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 Cellnex Telecom and Realia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cellnex Telecom SA and Realia, you can compare the effects of market volatilities on Cellnex Telecom and Realia 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 Cellnex Telecom with a short position of Realia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cellnex Telecom and Realia.

Diversification Opportunities for Cellnex Telecom and Realia

0.03
  Correlation Coefficient

Significant diversification

The 3 months correlation between Cellnex and Realia is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Cellnex Telecom SA and Realia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Realia and Cellnex Telecom 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 Cellnex Telecom SA are associated (or correlated) with Realia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Realia has no effect on the direction of Cellnex Telecom i.e., Cellnex Telecom and Realia go up and down completely randomly.

Pair Corralation between Cellnex Telecom and Realia

Assuming the 90 days trading horizon Cellnex Telecom SA is expected to under-perform the Realia. In addition to that, Cellnex Telecom is 2.31 times more volatile than Realia. It trades about -0.02 of its total potential returns per unit of risk. Realia is currently generating about 0.16 per unit of volatility. If you would invest  98.00  in Realia on August 31, 2024 and sell it today you would earn a total of  3.00  from holding Realia or generate 3.06% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy95.65%
ValuesDaily Returns

Cellnex Telecom SA  vs.  Realia

 Performance 
       Timeline  
Cellnex Telecom SA 

Risk-Adjusted Performance

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Weak
 
Strong
Very Weak
Over the last 90 days Cellnex Telecom SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Cellnex Telecom is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.
Realia 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Realia has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Realia is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Cellnex Telecom and Realia Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Cellnex Telecom and Realia

The main advantage of trading using opposite Cellnex Telecom and Realia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cellnex Telecom position performs unexpectedly, Realia 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 Realia will offset losses from the drop in Realia's long position.
The idea behind Cellnex Telecom SA and Realia 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.

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