Correlation Between Grupo Catalana and Elecnor SA
Can any of the company-specific risk be diversified away by investing in both Grupo Catalana and Elecnor 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 Grupo Catalana and Elecnor SA 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 Elecnor SA, you can compare the effects of market volatilities on Grupo Catalana and Elecnor 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 Grupo Catalana with a short position of Elecnor SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grupo Catalana and Elecnor SA.
Diversification Opportunities for Grupo Catalana and Elecnor SA
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Grupo and Elecnor is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Catalana Occidente and Elecnor SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elecnor SA 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 Elecnor SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elecnor SA has no effect on the direction of Grupo Catalana i.e., Grupo Catalana and Elecnor SA go up and down completely randomly.
Pair Corralation between Grupo Catalana and Elecnor SA
Assuming the 90 days trading horizon Grupo Catalana is expected to generate 2.53 times less return on investment than Elecnor SA. But when comparing it to its historical volatility, Grupo Catalana Occidente is 1.38 times less risky than Elecnor SA. It trades about 0.06 of its potential returns per unit of risk. Elecnor SA is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 986.00 in Elecnor SA on August 28, 2024 and sell it today you would earn a total of 1,019 from holding Elecnor SA or generate 103.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Grupo Catalana Occidente vs. Elecnor SA
Performance |
| Timeline |
| Grupo Catalana Occidente |
| Elecnor SA |
Grupo Catalana and Elecnor SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Grupo Catalana and Elecnor SA
The main advantage of trading using opposite Grupo Catalana and Elecnor SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grupo Catalana position performs unexpectedly, Elecnor 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 Elecnor SA will offset losses from the drop in Elecnor SA's long position.The idea behind Grupo Catalana Occidente and Elecnor SA pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Elecnor SA vs. Miquel y Costas | Elecnor SA vs. Construcciones y Auxiliar | Elecnor SA vs. CIE Automotive SA | Elecnor SA vs. Metrovacesa 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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