Correlation Between ASSOC BR and Ebro Foods
Can any of the company-specific risk be diversified away by investing in both ASSOC BR 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 ASSOC BR and Ebro Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ASSOC BR FOODS and Ebro Foods SA, you can compare the effects of market volatilities on ASSOC BR 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 ASSOC BR with a short position of Ebro Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of ASSOC BR and Ebro Foods.
Diversification Opportunities for ASSOC BR and Ebro Foods
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between ASSOC and Ebro is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding ASSOC BR FOODS and Ebro Foods SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ebro Foods SA and ASSOC BR 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 ASSOC BR FOODS 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 SA has no effect on the direction of ASSOC BR i.e., ASSOC BR and Ebro Foods go up and down completely randomly.
Pair Corralation between ASSOC BR and Ebro Foods
Assuming the 90 days trading horizon ASSOC BR FOODS is expected to under-perform the Ebro Foods. In addition to that, ASSOC BR is 1.44 times more volatile than Ebro Foods SA. It trades about -0.1 of its total potential returns per unit of risk. Ebro Foods SA is currently generating about 0.07 per unit of volatility. If you would invest 1,592 in Ebro Foods SA on December 5, 2024 and sell it today you would earn a total of 46.00 from holding Ebro Foods SA or generate 2.89% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
ASSOC BR FOODS vs. Ebro Foods SA
Performance |
Timeline |
ASSOC BR FOODS |
Ebro Foods SA |
ASSOC BR and Ebro Foods Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with ASSOC BR and Ebro Foods
The main advantage of trading using opposite ASSOC BR and Ebro Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ASSOC BR 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.ASSOC BR vs. G8 EDUCATION | ASSOC BR vs. CAREER EDUCATION | ASSOC BR vs. Perdoceo Education | ASSOC BR vs. Penta Ocean Construction Co |
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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 Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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