Correlation Between Arteche Lantegi and Urbas Grupo

Can any of the company-specific risk be diversified away by investing in both Arteche Lantegi and Urbas Grupo 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 Urbas Grupo 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 Urbas Grupo Financiero, you can compare the effects of market volatilities on Arteche Lantegi and Urbas Grupo 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 Urbas Grupo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arteche Lantegi and Urbas Grupo.

Diversification Opportunities for Arteche Lantegi and Urbas Grupo

0.41

Correlation Coefficient

Arteche Lantegi  Urbas Grupo

Very weak diversification

The 3 months correlation between Arteche and Urbas is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Arteche Lantegi Elkartea and Urbas Grupo Financiero in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Urbas Grupo Financiero 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 Urbas Grupo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Urbas Grupo Financiero has no effect on the direction of Arteche Lantegi i.e., Arteche Lantegi and Urbas Grupo go up and down completely randomly.

Pair Corralation between Arteche Lantegi and Urbas Grupo

Assuming the 90 days trading horizon Arteche Lantegi Elkartea is expected to generate 0.83 times more return on investment than Urbas Grupo. However, Arteche Lantegi Elkartea is 1.21 times less risky than Urbas Grupo. It trades about 0.06 of its potential returns per unit of risk. Urbas Grupo Financiero is currently generating about -0.03 per unit of risk. If you would invest  745.00  in Arteche Lantegi Elkartea on December 27, 2024 and sell it today you would earn a total of  55.00  from holding Arteche Lantegi Elkartea or generate 7.38% return on investment over 90 days.

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

Arteche Lantegi Elkartea  vs.  Urbas Grupo Financiero

Arteche Lantegi Elkartea

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Arteche Lantegi Elkartea are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Arteche Lantegi may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Urbas Grupo Financiero

Risk-Adjusted Performance

Very Weak

Over the last 90 days Urbas Grupo Financiero has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Urbas Grupo is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Arteche Lantegi and Urbas Grupo

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

The idea behind Arteche Lantegi Elkartea and Urbas Grupo Financiero 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..