Correlation Between Gestamp Automocion and Construcciones
Can any of the company-specific risk be diversified away by investing in both Gestamp Automocion 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 Gestamp Automocion and Construcciones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gestamp Automocion SA and Construcciones y Auxiliar, you can compare the effects of market volatilities on Gestamp Automocion 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 Gestamp Automocion with a short position of Construcciones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gestamp Automocion and Construcciones.
Diversification Opportunities for Gestamp Automocion and Construcciones
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Gestamp and Construcciones is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Gestamp Automocion SA 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 Gestamp Automocion 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 Gestamp Automocion SA 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 Gestamp Automocion i.e., Gestamp Automocion and Construcciones go up and down completely randomly.
Pair Corralation between Gestamp Automocion and Construcciones
Assuming the 90 days trading horizon Gestamp Automocion SA is expected to under-perform the Construcciones. In addition to that, Gestamp Automocion is 1.51 times more volatile than Construcciones y Auxiliar. It trades about -0.05 of its total potential returns per unit of risk. Construcciones y Auxiliar is currently generating about -0.01 per unit of volatility. If you would invest 3,372 in Construcciones y Auxiliar on September 3, 2024 and sell it today you would lose (72.00) from holding Construcciones y Auxiliar or give up 2.14% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gestamp Automocion SA vs. Construcciones y Auxiliar
Performance |
| Timeline |
| Gestamp Automocion |
| Construcciones y Auxiliar |
Gestamp Automocion and Construcciones Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gestamp Automocion and Construcciones
The main advantage of trading using opposite Gestamp Automocion and Construcciones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gestamp Automocion 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.| Gestamp Automocion vs. CIE Automotive SA | Gestamp Automocion vs. ENCE Energa y | Gestamp Automocion vs. Global Dominion Access | Gestamp Automocion vs. Viscofan |
| 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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