Correlation Between Ebro Foods and Arteche Lantegi

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

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

Diversification Opportunities for Ebro Foods and Arteche Lantegi

-0.19

Correlation Coefficient

Ebro Foods  Arteche Lantegi

Good diversification

The 3 months correlation between Ebro and Arteche is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Ebro Foods and Arteche Lantegi Elkartea in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arteche Lantegi Elkartea 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 Arteche Lantegi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arteche Lantegi Elkartea has no effect on the direction of Ebro Foods i.e., Ebro Foods and Arteche Lantegi go up and down completely randomly.

Pair Corralation between Ebro Foods and Arteche Lantegi

Assuming the 90 days trading horizon Ebro Foods is expected to generate 336.6 times less return on investment than Arteche Lantegi. But when comparing it to its historical volatility, Ebro Foods is 3.44 times less risky than Arteche Lantegi. It trades about 0.0 of its potential returns per unit of risk. Arteche Lantegi Elkartea is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  590.00  in Arteche Lantegi Elkartea on September 13, 2024 and sell it today you would earn a total of  55.00  from holding Arteche Lantegi Elkartea or generate 9.32% return on investment over 90 days.

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

Ebro Foods  vs.  Arteche Lantegi Elkartea

Ebro Foods

Risk-Adjusted Performance

0 of 100

Very Weak

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

Arteche Lantegi Elkartea

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Arteche Lantegi Elkartea are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Arteche Lantegi may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Ebro Foods and Arteche Lantegi

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

The idea behind Ebro Foods and Arteche Lantegi Elkartea 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.