Correlation Between Faes Farma and Azkoyen
Can any of the company-specific risk be diversified away by investing in both Faes Farma and Azkoyen 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 Faes Farma and Azkoyen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Faes Farma SA and Azkoyen, you can compare the effects of market volatilities on Faes Farma and Azkoyen 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 Faes Farma with a short position of Azkoyen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Faes Farma and Azkoyen.
Diversification Opportunities for Faes Farma and Azkoyen
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Faes and Azkoyen is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Faes Farma SA and Azkoyen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Azkoyen and Faes Farma 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 Faes Farma SA are associated (or correlated) with Azkoyen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Azkoyen has no effect on the direction of Faes Farma i.e., Faes Farma and Azkoyen go up and down completely randomly.
Pair Corralation between Faes Farma and Azkoyen
Assuming the 90 days trading horizon Faes Farma SA is expected to under-perform the Azkoyen. In addition to that, Faes Farma is 1.21 times more volatile than Azkoyen. It trades about -0.08 of its total potential returns per unit of risk. Azkoyen is currently generating about 0.46 per unit of volatility. If you would invest 636.00 in Azkoyen on December 6, 2024 and sell it today you would earn a total of 100.00 from holding Azkoyen or generate 15.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Faes Farma SA vs. Azkoyen
Performance |
| Timeline |
| Faes Farma SA |
| Azkoyen |
Faes Farma and Azkoyen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Faes Farma and Azkoyen
The main advantage of trading using opposite Faes Farma and Azkoyen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Faes Farma position performs unexpectedly, Azkoyen 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 Azkoyen will offset losses from the drop in Azkoyen's long position.| Faes Farma vs. ENCE Energa y | ||
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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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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