Correlation Between Faes Farma and Miquel Y
Can any of the company-specific risk be diversified away by investing in both Faes Farma and Miquel Y 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 Miquel Y 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 Miquel y Costas, you can compare the effects of market volatilities on Faes Farma and Miquel Y 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 Miquel Y. Check out your portfolio center. Please also check ongoing floating volatility patterns of Faes Farma and Miquel Y.
Diversification Opportunities for Faes Farma and Miquel Y
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Faes and Miquel is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Faes Farma SA and Miquel y Costas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Miquel y Costas 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 Miquel Y. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Miquel y Costas has no effect on the direction of Faes Farma i.e., Faes Farma and Miquel Y go up and down completely randomly.
Pair Corralation between Faes Farma and Miquel Y
Assuming the 90 days trading horizon Faes Farma SA is expected to under-perform the Miquel Y. But the stock apears to be less risky and, when comparing its historical volatility, Faes Farma SA is 1.88 times less risky than Miquel Y. The stock trades about -0.12 of its potential returns per unit of risk. The Miquel y Costas is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 1,246 in Miquel y Costas on August 30, 2024 and sell it today you would lose (16.00) from holding Miquel y Costas or give up 1.28% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Faes Farma SA vs. Miquel y Costas
Performance |
| Timeline |
| Faes Farma SA |
| Miquel y Costas |
Faes Farma and Miquel Y Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Faes Farma and Miquel Y
The main advantage of trading using opposite Faes Farma and Miquel Y positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Faes Farma position performs unexpectedly, Miquel Y 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 Miquel Y will offset losses from the drop in Miquel Y's long position.| Faes Farma vs. ENCE Energa y | Faes Farma vs. Almirall SA | Faes Farma vs. Viscofan | Faes Farma vs. Vidrala SA |
| Miquel Y vs. Vidrala SA | Miquel Y vs. Grupo Catalana Occidente | Miquel Y vs. Cia de Distribucion | Miquel Y vs. Viscofan |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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