Correlation Between Ebro Foods and Aperam SA
Can any of the company-specific risk be diversified away by investing in both Ebro Foods and Aperam SA 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 Aperam SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ebro Foods and Aperam SA, you can compare the effects of market volatilities on Ebro Foods and Aperam SA 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 Aperam SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ebro Foods and Aperam SA.
Diversification Opportunities for Ebro Foods and Aperam SA
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Ebro and Aperam is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Ebro Foods and Aperam SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aperam SA 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 are associated (or correlated) with Aperam SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aperam SA has no effect on the direction of Ebro Foods i.e., Ebro Foods and Aperam SA go up and down completely randomly.
Pair Corralation between Ebro Foods and Aperam SA
Assuming the 90 days trading horizon Ebro Foods is expected to under-perform the Aperam SA. But the stock apears to be less risky and, when comparing its historical volatility, Ebro Foods is 2.26 times less risky than Aperam SA. The stock trades about -0.13 of its potential returns per unit of risk. The Aperam SA is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 2,453 in Aperam SA on September 1, 2024 and sell it today you would earn a total of 271.00 from holding Aperam SA or generate 11.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ebro Foods vs. Aperam SA
Performance |
| Timeline |
| Ebro Foods |
| Aperam SA |
Ebro Foods and Aperam SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ebro Foods and Aperam SA
The main advantage of trading using opposite Ebro Foods and Aperam SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ebro Foods position performs unexpectedly, Aperam SA 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 Aperam SA will offset losses from the drop in Aperam SA's long position.| Ebro Foods vs. Enags SA | Ebro Foods vs. Mapfre | Ebro Foods vs. Cia de Distribucion | Ebro Foods vs. ACS Actividades de |
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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 Valuation module to check real value of public entities based on technical and fundamental data.
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