Correlation Between Ebro Foods and Atresmedia Corporacin

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

By analyzing existing cross correlation between Ebro Foods and Atresmedia Corporacin de, you can compare the effects of market volatilities on Ebro Foods and Atresmedia Corporacin 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 Atresmedia Corporacin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ebro Foods and Atresmedia Corporacin.

Diversification Opportunities for Ebro Foods and Atresmedia Corporacin

0.64

Correlation Coefficient

Ebro Foods  Atresmedia Corporacin

Poor diversification

The 3 months correlation between Ebro and Atresmedia is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Ebro Foods and Atresmedia Corporacin de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atresmedia Corporacin 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 are associated (or correlated) with Atresmedia Corporacin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atresmedia Corporacin has no effect on the direction of Ebro Foods i.e., Ebro Foods and Atresmedia Corporacin go up and down completely randomly.

Pair Corralation between Ebro Foods and Atresmedia Corporacin

Assuming the 90 days trading horizon Ebro Foods is expected to generate 2.45 times less return on investment than Atresmedia Corporacin. But when comparing it to its historical volatility, Ebro Foods is 1.61 times less risky than Atresmedia Corporacin. It trades about 0.2 of its potential returns per unit of risk. Atresmedia Corporacin de is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest  436.00  in Atresmedia Corporacin de on December 30, 2024 and sell it today you would earn a total of  86.00  from holding Atresmedia Corporacin de or generate 19.72% return on investment over 90 days.

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

Ebro Foods  vs.  Atresmedia Corporacin de

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 rather unsteady fundamental indicators, Ebro Foods may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Atresmedia Corporacin

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Atresmedia Corporacin de are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady primary indicators, Atresmedia Corporacin exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ebro Foods and Atresmedia Corporacin

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

The idea behind Ebro Foods and Atresmedia Corporacin de 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.