Correlation Between ENCE Energa and Laboratorios Farmaceuticos
Can any of the company-specific risk be diversified away by investing in both ENCE Energa 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 ENCE Energa and Laboratorios Farmaceuticos into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ENCE Energa y and Laboratorios Farmaceuticos ROVI, you can compare the effects of market volatilities on ENCE Energa 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 ENCE Energa with a short position of Laboratorios Farmaceuticos. Check out your portfolio center. Please also check ongoing floating volatility patterns of ENCE Energa and Laboratorios Farmaceuticos.
Diversification Opportunities for ENCE Energa and Laboratorios Farmaceuticos
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between ENCE and Laboratorios is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding ENCE Energa y and Laboratorios Farmaceuticos ROV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Laboratorios Farmaceuticos and ENCE Energa 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 ENCE Energa y 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 ENCE Energa i.e., ENCE Energa and Laboratorios Farmaceuticos go up and down completely randomly.
Pair Corralation between ENCE Energa and Laboratorios Farmaceuticos
Assuming the 90 days trading horizon ENCE Energa y is expected to generate 0.49 times more return on investment than Laboratorios Farmaceuticos. However, ENCE Energa y is 2.02 times less risky than Laboratorios Farmaceuticos. It trades about -0.09 of its potential returns per unit of risk. Laboratorios Farmaceuticos ROVI is currently generating about -0.25 per unit of risk. If you would invest 285.00 in ENCE Energa y on September 1, 2024 and sell it today you would lose (9.00) from holding ENCE Energa y or give up 3.16% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
ENCE Energa y vs. Laboratorios Farmaceuticos ROV
Performance |
| Timeline |
| ENCE Energa y |
| Laboratorios Farmaceuticos |
ENCE Energa and Laboratorios Farmaceuticos Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ENCE Energa and Laboratorios Farmaceuticos
The main advantage of trading using opposite ENCE Energa and Laboratorios Farmaceuticos positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ENCE Energa 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.| ENCE Energa vs. Acerinox | ENCE Energa vs. CIE Automotive SA | ENCE Energa vs. Mapfre | ENCE Energa vs. ArcelorMittal SA |
| Laboratorios Farmaceuticos vs. Fluidra | Laboratorios Farmaceuticos vs. Almirall SA | Laboratorios Farmaceuticos vs. Grifols SA | Laboratorios Farmaceuticos vs. Pharma Mar 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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