Correlation Between Talgo SA and Construcciones
Can any of the company-specific risk be diversified away by investing in both Talgo SA 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 Talgo SA and Construcciones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Talgo SA and Construcciones y Auxiliar, you can compare the effects of market volatilities on Talgo SA 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 Talgo SA with a short position of Construcciones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Talgo SA and Construcciones.
Diversification Opportunities for Talgo SA and Construcciones
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Talgo and Construcciones is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Talgo 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 Talgo SA 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 Talgo 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 Talgo SA i.e., Talgo SA and Construcciones go up and down completely randomly.
Pair Corralation between Talgo SA and Construcciones
Assuming the 90 days trading horizon Talgo SA is expected to generate 1.27 times more return on investment than Construcciones. However, Talgo SA is 1.27 times more volatile than Construcciones y Auxiliar. It trades about 0.01 of its potential returns per unit of risk. Construcciones y Auxiliar is currently generating about -0.17 per unit of risk. If you would invest 348.00 in Talgo SA on August 30, 2024 and sell it today you would earn a total of 0.00 from holding Talgo SA or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Talgo SA vs. Construcciones y Auxiliar
Performance |
| Timeline |
| Talgo SA |
| Construcciones y Auxiliar |
Talgo SA and Construcciones Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Talgo SA and Construcciones
The main advantage of trading using opposite Talgo SA and Construcciones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Talgo SA 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.| Talgo SA vs. Construcciones y Auxiliar | Talgo SA vs. Gestamp Automocion SA | Talgo SA vs. ENCE Energa y | Talgo SA vs. Tecnicas Reunidas |
| 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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