Correlation Between TELE2 B and Ebro Foods

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Can any of the company-specific risk be diversified away by investing in both TELE2 B and Ebro Foods 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 TELE2 B and Ebro Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TELE2 B and Ebro Foods SA, you can compare the effects of market volatilities on TELE2 B and Ebro Foods 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 TELE2 B with a short position of Ebro Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of TELE2 B and Ebro Foods.

Diversification Opportunities for TELE2 B and Ebro Foods

0.34
  Correlation Coefficient

Weak diversification

The 3 months correlation between TELE2 and Ebro is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding TELE2 B and Ebro Foods SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ebro Foods SA and TELE2 B 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 TELE2 B are associated (or correlated) with Ebro Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ebro Foods SA has no effect on the direction of TELE2 B i.e., TELE2 B and Ebro Foods go up and down completely randomly.

Pair Corralation between TELE2 B and Ebro Foods

Assuming the 90 days trading horizon TELE2 B is expected to under-perform the Ebro Foods. But the stock apears to be less risky and, when comparing its historical volatility, TELE2 B is 1.17 times less risky than Ebro Foods. The stock trades about -0.14 of its potential returns per unit of risk. The Ebro Foods SA is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  1,612  in Ebro Foods SA on September 25, 2024 and sell it today you would lose (32.00) from holding Ebro Foods SA or give up 1.99% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

TELE2 B   vs.  Ebro Foods SA

 Performance 
       Timeline  
TELE2 B 

Risk-Adjusted Performance

7 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in TELE2 B are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, TELE2 B unveiled solid returns over the last few months and may actually be approaching a breakup point.
Ebro Foods SA 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Ebro Foods SA are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Ebro Foods is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

TELE2 B and Ebro Foods Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with TELE2 B and Ebro Foods

The main advantage of trading using opposite TELE2 B and Ebro Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TELE2 B position performs unexpectedly, Ebro Foods 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 Ebro Foods will offset losses from the drop in Ebro Foods' long position.
The idea behind TELE2 B and Ebro Foods 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.
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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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .

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