Correlation Between Alstria Office and Ebro Foods

Can any of the company-specific risk be diversified away by investing in both Alstria Office 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 Alstria Office and Ebro Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between alstria office REIT AG and Ebro Foods, you can compare the effects of market volatilities on Alstria Office 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 Alstria Office with a short position of Ebro Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alstria Office and Ebro Foods.

Diversification Opportunities for Alstria Office and Ebro Foods

-0.31

Correlation Coefficient

Alstria Office  Ebro Foods

Very good diversification

The 3 months correlation between Alstria and Ebro is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding alstria office REIT AG and Ebro Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ebro Foods and Alstria Office 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 alstria office REIT AG 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 has no effect on the direction of Alstria Office i.e., Alstria Office and Ebro Foods go up and down completely randomly.

Pair Corralation between Alstria Office and Ebro Foods

Assuming the 90 days trading horizon alstria office REIT AG is expected to generate 5.54 times more return on investment than Ebro Foods. However, Alstria Office is 5.54 times more volatile than Ebro Foods. It trades about 0.06 of its potential returns per unit of risk. Ebro Foods is currently generating about 0.04 per unit of risk. If you would invest  341.00  in alstria office REIT AG on October 9, 2024 and sell it today you would earn a total of  194.00  from holding alstria office REIT AG or generate 56.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

alstria office REIT AG  vs.  Ebro Foods

alstria office REIT

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days alstria office REIT AG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent essential indicators, Alstria Office is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Ebro Foods

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ebro Foods has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Ebro Foods is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Alstria Office and Ebro Foods

The main advantage of trading using opposite Alstria Office and Ebro Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alstria Office 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 alstria office REIT AG and Ebro Foods 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.