Correlation Between Auction Technology and Ebro Foods

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

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

Diversification Opportunities for Auction Technology and Ebro Foods

0.32

Correlation Coefficient

Auction Technology  Ebro Foods

Weak diversification

The 3 months correlation between Auction and Ebro is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Auction Technology Group and Ebro Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ebro Foods and Auction Technology 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 Auction Technology Group 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 has no effect on the direction of Auction Technology i.e., Auction Technology and Ebro Foods go up and down completely randomly.

Pair Corralation between Auction Technology and Ebro Foods

Assuming the 90 days trading horizon Auction Technology Group is expected to generate 2.47 times more return on investment than Ebro Foods. However, Auction Technology is 2.47 times more volatile than Ebro Foods. It trades about 0.1 of its potential returns per unit of risk. Ebro Foods is currently generating about 0.2 per unit of risk. If you would invest  54,800  in Auction Technology Group on December 30, 2024 and sell it today you would earn a total of  5,400  from holding Auction Technology Group or generate 9.85% return on investment over 90 days.

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

Auction Technology Group  vs.  Ebro Foods

Auction Technology

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Auction Technology Group are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Auction Technology may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Ebro Foods

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ebro Foods are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Ebro Foods may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Auction Technology and Ebro Foods

The main advantage of trading using opposite Auction Technology and Ebro Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Auction Technology 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.

The idea behind Auction Technology Group and Ebro Foods 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.