Correlation Between Grupo Ecoener and Urbas Grupo

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

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

Diversification Opportunities for Grupo Ecoener and Urbas Grupo

0.46

Correlation Coefficient

Grupo Ecoener  Urbas Grupo

Very weak diversification

The 3 months correlation between Grupo and Urbas is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Ecoener 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 Grupo Ecoener 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 Grupo Ecoener 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 Grupo Ecoener i.e., Grupo Ecoener and Urbas Grupo go up and down completely randomly.

Pair Corralation between Grupo Ecoener and Urbas Grupo

Assuming the 90 days trading horizon Grupo Ecoener SA is expected to generate 0.49 times more return on investment than Urbas Grupo. However, Grupo Ecoener SA is 2.04 times less risky than Urbas Grupo. It trades about 0.03 of its potential returns per unit of risk. Urbas Grupo Financiero is currently generating about -0.03 per unit of risk. If you would invest  450.00  in Grupo Ecoener SA on December 29, 2024 and sell it today you would earn a total of  10.00  from holding Grupo Ecoener SA or generate 2.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.46%
Values	Daily Returns

Grupo Ecoener SA  vs.  Urbas Grupo Financiero

Grupo Ecoener SA

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Grupo Ecoener SA are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Grupo Ecoener is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Urbas Grupo Financiero

Risk-Adjusted Performance

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 rather sound basic indicators, Urbas Grupo is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Grupo Ecoener and Urbas Grupo

The main advantage of trading using opposite Grupo Ecoener and Urbas Grupo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grupo Ecoener 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 Grupo Ecoener 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.

Check out your portfolio center.

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.