Correlation Between Grupo Catalana and Construcciones
Can any of the company-specific risk be diversified away by investing in both Grupo Catalana and Construcciones 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 Grupo Catalana and Construcciones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Grupo Catalana Occidente and Construcciones y Auxiliar, you can compare the effects of market volatilities on Grupo Catalana and Construcciones 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 Grupo Catalana with a short position of Construcciones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grupo Catalana and Construcciones.
Diversification Opportunities for Grupo Catalana and Construcciones
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Grupo and Construcciones is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Catalana Occidente and Construcciones y Auxiliar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Construcciones y Auxiliar and Grupo Catalana 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 Grupo Catalana Occidente are associated (or correlated) with Construcciones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Construcciones y Auxiliar has no effect on the direction of Grupo Catalana i.e., Grupo Catalana and Construcciones go up and down completely randomly.
Pair Corralation between Grupo Catalana and Construcciones
Assuming the 90 days trading horizon Grupo Catalana Occidente is expected to generate 0.8 times more return on investment than Construcciones. However, Grupo Catalana Occidente is 1.25 times less risky than Construcciones. It trades about 0.06 of its potential returns per unit of risk. Construcciones y Auxiliar is currently generating about 0.04 per unit of risk. If you would invest 3,335 in Grupo Catalana Occidente on November 2, 2024 and sell it today you would earn a total of 515.00 from holding Grupo Catalana Occidente or generate 15.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Grupo Catalana Occidente vs. Construcciones y Auxiliar
Performance |
| Timeline |
| Grupo Catalana Occidente |
| Construcciones y Auxiliar |
Grupo Catalana and Construcciones Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Grupo Catalana and Construcciones
The main advantage of trading using opposite Grupo Catalana and Construcciones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grupo Catalana position performs unexpectedly, Construcciones 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 Construcciones will offset losses from the drop in Construcciones' long position.| Grupo Catalana vs. Miquel y Costas | Grupo Catalana vs. Vidrala SA | Grupo Catalana vs. Viscofan | Grupo Catalana vs. Cia de Distribucion |
| Construcciones vs. CIE Automotive SA | Construcciones vs. Talgo SA | Construcciones vs. Viscofan | Construcciones vs. Tecnicas Reunidas |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
Other Complementary Tools
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world |