Correlation Between Acciona SA and Bilfinger

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

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

Diversification Opportunities for Acciona SA and Bilfinger

0.58

Correlation Coefficient

Acciona SA  Bilfinger

Very weak diversification

The 3 months correlation between Acciona and Bilfinger is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Acciona SA and Bilfinger SE ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bilfinger SE ADR and Acciona 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 Acciona SA are associated (or correlated) with Bilfinger. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bilfinger SE ADR has no effect on the direction of Acciona SA i.e., Acciona SA and Bilfinger go up and down completely randomly.

Pair Corralation between Acciona SA and Bilfinger

Assuming the 90 days horizon Acciona SA is expected to generate 2.41 times less return on investment than Bilfinger. But when comparing it to its historical volatility, Acciona SA is 1.64 times less risky than Bilfinger. It trades about 0.12 of its potential returns per unit of risk. Bilfinger SE ADR is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  942.00  in Bilfinger SE ADR on December 30, 2024 and sell it today you would earn a total of  473.00  from holding Bilfinger SE ADR or generate 50.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	93.55%
Values	Daily Returns

Acciona SA  vs.  Bilfinger SE ADR

Acciona SA

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Acciona SA are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak forward indicators, Acciona SA reported solid returns over the last few months and may actually be approaching a breakup point.

Bilfinger SE ADR

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bilfinger SE ADR are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak fundamental drivers, Bilfinger showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Acciona SA and Bilfinger

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

The idea behind Acciona SA and Bilfinger SE ADR 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.