Correlation Between Ellaktor and GEK TERNA

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

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

Diversification Opportunities for Ellaktor and GEK TERNA

-0.17

Correlation Coefficient

Ellaktor  GEK TERNA

Good diversification

The 3 months correlation between Ellaktor and GEK is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Ellaktor SA and GEK TERNA Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GEK TERNA Holdings and Ellaktor 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 Ellaktor SA are associated (or correlated) with GEK TERNA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GEK TERNA Holdings has no effect on the direction of Ellaktor i.e., Ellaktor and GEK TERNA go up and down completely randomly.

Pair Corralation between Ellaktor and GEK TERNA

Assuming the 90 days trading horizon Ellaktor SA is expected to under-perform the GEK TERNA. In addition to that, Ellaktor is 1.81 times more volatile than GEK TERNA Holdings. It trades about -0.06 of its total potential returns per unit of risk. GEK TERNA Holdings is currently generating about 0.12 per unit of volatility. If you would invest  1,728  in GEK TERNA Holdings on September 14, 2024 and sell it today you would earn a total of  118.00  from holding GEK TERNA Holdings or generate 6.83% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Ellaktor SA  vs.  GEK TERNA Holdings

Ellaktor SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ellaktor SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's forward-looking signals remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

GEK TERNA Holdings

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in GEK TERNA Holdings are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very weak technical and fundamental indicators, GEK TERNA may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Ellaktor and GEK TERNA

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

The idea behind Ellaktor SA and GEK TERNA Holdings 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.