Correlation Between PEPTONIC MEDICAL and Iberdrola

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

By analyzing existing cross correlation between PEPTONIC MEDICAL and Iberdrola SA, you can compare the effects of market volatilities on PEPTONIC MEDICAL and Iberdrola 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 PEPTONIC MEDICAL with a short position of Iberdrola. Check out your portfolio center. Please also check ongoing floating volatility patterns of PEPTONIC MEDICAL and Iberdrola.

Diversification Opportunities for PEPTONIC MEDICAL and Iberdrola

0.0

Correlation Coefficient

PEPTONIC MEDICAL  Iberdrola

Pay attention - limited upside

The 3 months correlation between PEPTONIC and Iberdrola is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding PEPTONIC MEDICAL and Iberdrola SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iberdrola SA and PEPTONIC MEDICAL 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 PEPTONIC MEDICAL are associated (or correlated) with Iberdrola. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iberdrola SA has no effect on the direction of PEPTONIC MEDICAL i.e., PEPTONIC MEDICAL and Iberdrola go up and down completely randomly.

Pair Corralation between PEPTONIC MEDICAL and Iberdrola

If you would invest  1,285  in Iberdrola SA on December 23, 2024 and sell it today you would earn a total of  160.00  from holding Iberdrola SA or generate 12.45% return on investment over 90 days.

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

PEPTONIC MEDICAL  vs.  Iberdrola SA

PEPTONIC MEDICAL

Risk-Adjusted Performance

Very Weak

Over the last 90 days PEPTONIC MEDICAL has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, PEPTONIC MEDICAL is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Iberdrola SA

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Iberdrola SA are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain technical and fundamental indicators, Iberdrola may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with PEPTONIC MEDICAL and Iberdrola

The main advantage of trading using opposite PEPTONIC MEDICAL and Iberdrola positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PEPTONIC MEDICAL position performs unexpectedly, Iberdrola 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 Iberdrola will offset losses from the drop in Iberdrola's long position.

The idea behind PEPTONIC MEDICAL and Iberdrola 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.

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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.