Correlation Between Cellnex Telecom and Laboratorios Farmaceuticos
Can any of the company-specific risk be diversified away by investing in both Cellnex Telecom and Laboratorios Farmaceuticos 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 Laboratorios Farmaceuticos 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 Laboratorios Farmaceuticos ROVI, you can compare the effects of market volatilities on Cellnex Telecom and Laboratorios Farmaceuticos 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 Laboratorios Farmaceuticos. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cellnex Telecom and Laboratorios Farmaceuticos.
Diversification Opportunities for Cellnex Telecom and Laboratorios Farmaceuticos
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cellnex and Laboratorios is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Cellnex Telecom SA and Laboratorios Farmaceuticos ROV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Laboratorios Farmaceuticos 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 Laboratorios Farmaceuticos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Laboratorios Farmaceuticos has no effect on the direction of Cellnex Telecom i.e., Cellnex Telecom and Laboratorios Farmaceuticos go up and down completely randomly.
Pair Corralation between Cellnex Telecom and Laboratorios Farmaceuticos
Assuming the 90 days trading horizon Cellnex Telecom SA is expected to under-perform the Laboratorios Farmaceuticos. But the stock apears to be less risky and, when comparing its historical volatility, Cellnex Telecom SA is 1.16 times less risky than Laboratorios Farmaceuticos. The stock trades about -0.01 of its potential returns per unit of risk. The Laboratorios Farmaceuticos ROVI is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 4,169 in Laboratorios Farmaceuticos ROVI on August 31, 2024 and sell it today you would earn a total of 2,276 from holding Laboratorios Farmaceuticos ROVI or generate 54.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cellnex Telecom SA vs. Laboratorios Farmaceuticos ROV
Performance |
| Timeline |
| Cellnex Telecom SA |
| Laboratorios Farmaceuticos |
Cellnex Telecom and Laboratorios Farmaceuticos Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cellnex Telecom and Laboratorios Farmaceuticos
The main advantage of trading using opposite Cellnex Telecom and Laboratorios Farmaceuticos positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cellnex Telecom position performs unexpectedly, Laboratorios Farmaceuticos 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 Laboratorios Farmaceuticos will offset losses from the drop in Laboratorios Farmaceuticos' long position.| Cellnex Telecom vs. ACS Actividades de | Cellnex Telecom vs. Ferrovial | Cellnex Telecom vs. Melia Hotels | Cellnex Telecom vs. Lyxor UCITS Ibex35 |
| Laboratorios Farmaceuticos vs. Grifols SA | Laboratorios Farmaceuticos vs. Pharma Mar SA | Laboratorios Farmaceuticos vs. Metrovacesa SA | Laboratorios Farmaceuticos vs. Elecnor 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 Stocks Directory module to find actively traded stocks across global markets.
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