Correlation Between Cellnex Telecom and Urbas Grupo

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

By analyzing existing cross correlation between Cellnex Telecom SA and Urbas Grupo Financiero, you can compare the effects of market volatilities on Cellnex Telecom 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 Cellnex Telecom with a short position of Urbas Grupo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cellnex Telecom and Urbas Grupo.

Diversification Opportunities for Cellnex Telecom and Urbas Grupo

0.88

Correlation Coefficient

Cellnex Telecom  Urbas Grupo

Very poor diversification

The 3 months correlation between Cellnex and Urbas is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Cellnex Telecom SA 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 Cellnex Telecom 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 Cellnex Telecom SA 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 Cellnex Telecom i.e., Cellnex Telecom and Urbas Grupo go up and down completely randomly.

Pair Corralation between Cellnex Telecom and Urbas Grupo

Assuming the 90 days trading horizon Cellnex Telecom SA is expected to under-perform the Urbas Grupo. But the stock apears to be less risky and, when comparing its historical volatility, Cellnex Telecom SA is 2.43 times less risky than Urbas Grupo. The stock trades about -0.38 of its potential returns per unit of risk. The Urbas Grupo Financiero is currently generating about -0.15 of returns per unit of risk over similar time horizon. If you would invest  0.30  in Urbas Grupo Financiero on October 7, 2024 and sell it today you would lose (0.03) from holding Urbas Grupo Financiero or give up 10.0% of portfolio value over 90 days.

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

Cellnex Telecom SA  vs.  Urbas Grupo Financiero

Cellnex Telecom SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cellnex Telecom SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Urbas Grupo Financiero

Risk-Adjusted Performance

0 of 100

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 unsteady performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Cellnex Telecom and Urbas Grupo

The main advantage of trading using opposite Cellnex Telecom and Urbas Grupo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cellnex Telecom 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 Cellnex Telecom SA 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.