Correlation Between Aena SA and Acerinox

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

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

Diversification Opportunities for Aena SA and Acerinox

0.88

Correlation Coefficient

Aena SA  Acerinox

Very poor diversification

The 3 months correlation between Aena and Acerinox is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Aena SA and Acerinox in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acerinox and Aena 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 Aena SA are associated (or correlated) with Acerinox. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acerinox has no effect on the direction of Aena SA i.e., Aena SA and Acerinox go up and down completely randomly.

Pair Corralation between Aena SA and Acerinox

Assuming the 90 days trading horizon Aena SA is expected to generate 1.93 times less return on investment than Acerinox. But when comparing it to its historical volatility, Aena SA is 1.47 times less risky than Acerinox. It trades about 0.15 of its potential returns per unit of risk. Acerinox is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  913.00  in Acerinox on December 30, 2024 and sell it today you would earn a total of  191.00  from holding Acerinox or generate 20.92% return on investment over 90 days.

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

Aena SA  vs.  Acerinox

Aena SA

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Aena SA are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Aena SA may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Acerinox

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Acerinox are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Acerinox exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aena SA and Acerinox

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

The idea behind Aena SA and Acerinox 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 Transaction History module to view history of all your transactions and understand their impact on performance.