Correlation Between Ebro Foods and CAIRN HOMES

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Ebro Foods and CAIRN HOMES 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 Ebro Foods and CAIRN HOMES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ebro Foods SA and CAIRN HOMES EO, you can compare the effects of market volatilities on Ebro Foods and CAIRN HOMES 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 Ebro Foods with a short position of CAIRN HOMES. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ebro Foods and CAIRN HOMES.

Diversification Opportunities for Ebro Foods and CAIRN HOMES

0.04
  Correlation Coefficient

Significant diversification

The 3 months correlation between Ebro and CAIRN is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Ebro Foods SA and CAIRN HOMES EO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CAIRN HOMES EO and Ebro Foods 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 Ebro Foods SA are associated (or correlated) with CAIRN HOMES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CAIRN HOMES EO has no effect on the direction of Ebro Foods i.e., Ebro Foods and CAIRN HOMES go up and down completely randomly.

Pair Corralation between Ebro Foods and CAIRN HOMES

Assuming the 90 days horizon Ebro Foods is expected to generate 24.63 times less return on investment than CAIRN HOMES. But when comparing it to its historical volatility, Ebro Foods SA is 4.88 times less risky than CAIRN HOMES. It trades about 0.04 of its potential returns per unit of risk. CAIRN HOMES EO is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  215.00  in CAIRN HOMES EO on October 8, 2024 and sell it today you would earn a total of  21.00  from holding CAIRN HOMES EO or generate 9.77% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Ebro Foods SA  vs.  CAIRN HOMES EO

 Performance 
       Timeline  
Ebro Foods SA 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Ebro Foods SA are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Ebro Foods is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.
CAIRN HOMES EO 

Risk-Adjusted Performance

8 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in CAIRN HOMES EO are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, CAIRN HOMES reported solid returns over the last few months and may actually be approaching a breakup point.

Ebro Foods and CAIRN HOMES Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Ebro Foods and CAIRN HOMES

The main advantage of trading using opposite Ebro Foods and CAIRN HOMES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ebro Foods position performs unexpectedly, CAIRN HOMES 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 CAIRN HOMES will offset losses from the drop in CAIRN HOMES's long position.
The idea behind Ebro Foods SA and CAIRN HOMES EO 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.

Other Complementary Tools

Equity Valuation
Check real value of public entities based on technical and fundamental data
USA ETFs
Find actively traded Exchange Traded Funds (ETF) in USA
Fundamental Analysis
View fundamental data based on most recent published financial statements
Funds Screener
Find actively-traded funds from around the world traded on over 30 global exchanges
Instant Ratings
Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance