Correlation Between Elia Group and Viohalco

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

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

Diversification Opportunities for Elia Group and Viohalco

0.76

Correlation Coefficient

Elia Group  Viohalco

Poor diversification

The 3 months correlation between Elia and Viohalco is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Elia Group SANV and Viohalco SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Viohalco SA and Elia Group 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 Elia Group SANV are associated (or correlated) with Viohalco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Viohalco SA has no effect on the direction of Elia Group i.e., Elia Group and Viohalco go up and down completely randomly.

Pair Corralation between Elia Group and Viohalco

Assuming the 90 days trading horizon Elia Group SANV is expected to under-perform the Viohalco. In addition to that, Elia Group is 1.02 times more volatile than Viohalco SA. It trades about -0.22 of its total potential returns per unit of risk. Viohalco SA is currently generating about 0.01 per unit of volatility. If you would invest  555.00  in Viohalco SA on September 13, 2024 and sell it today you would lose (1.00) from holding Viohalco SA or give up 0.18% of portfolio value over 90 days.

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

Elia Group SANV  vs.  Viohalco SA

Elia Group SANV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Elia Group SANV has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's forward indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Viohalco SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Viohalco SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Viohalco is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Elia Group and Viohalco

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

The idea behind Elia Group SANV and Viohalco 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.