Correlation Between Construcciones and Enags SA

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

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

Diversification Opportunities for Construcciones and Enags SA

0.42

Correlation Coefficient

Construcciones  Enags SA

Very weak diversification

The 3 months correlation between Construcciones and Enags is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Construcciones y Auxiliar and Enags SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enags SA and Construcciones 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 Construcciones y Auxiliar are associated (or correlated) with Enags SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enags SA has no effect on the direction of Construcciones i.e., Construcciones and Enags SA go up and down completely randomly.

Pair Corralation between Construcciones and Enags SA

Assuming the 90 days trading horizon Construcciones y Auxiliar is expected to under-perform the Enags SA. In addition to that, Construcciones is 1.55 times more volatile than Enags SA. It trades about -0.12 of its total potential returns per unit of risk. Enags SA is currently generating about -0.07 per unit of volatility. If you would invest  1,229  in Enags SA on October 11, 2024 and sell it today you would lose (36.00) from holding Enags SA or give up 2.93% of portfolio value over 90 days.

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

Construcciones y Auxiliar  vs.  Enags SA

Construcciones y Auxiliar

Risk-Adjusted Performance

0 of 100

Very Weak

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

Enags SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Enags SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Construcciones and Enags SA

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

The idea behind Construcciones y Auxiliar and Enags 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.