Correlation Between Arteche Lantegi and Profithol

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

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

Diversification Opportunities for Arteche Lantegi and Profithol

-0.45

Correlation Coefficient

Arteche Lantegi  Profithol

Very good diversification

The 3 months correlation between Arteche and Profithol is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Arteche Lantegi Elkartea and Profithol SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Profithol SA and Arteche Lantegi 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 Arteche Lantegi Elkartea are associated (or correlated) with Profithol. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Profithol SA has no effect on the direction of Arteche Lantegi i.e., Arteche Lantegi and Profithol go up and down completely randomly.

Pair Corralation between Arteche Lantegi and Profithol

Assuming the 90 days trading horizon Arteche Lantegi is expected to generate 3.71 times less return on investment than Profithol. But when comparing it to its historical volatility, Arteche Lantegi Elkartea is 3.12 times less risky than Profithol. It trades about 0.03 of its potential returns per unit of risk. Profithol SA is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  52.00  in Profithol SA on December 31, 2024 and sell it today you would earn a total of  1.00  from holding Profithol SA or generate 1.92% return on investment over 90 days.

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

Arteche Lantegi Elkartea  vs.  Profithol SA

Arteche Lantegi Elkartea

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Arteche Lantegi Elkartea are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Arteche Lantegi is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Profithol SA

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Profithol SA are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical indicators, Profithol exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Arteche Lantegi and Profithol

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

The idea behind Arteche Lantegi Elkartea and Profithol 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.

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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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.