Correlation Between Enags SA and Construcciones

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

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

Diversification Opportunities for Enags SA and Construcciones

0.42

Correlation Coefficient

Enags SA  Construcciones

Very weak diversification

The 3 months correlation between Enags and Construcciones is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Enags SA and Construcciones y Auxiliar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Construcciones y Auxiliar and Enags SA 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 Enags SA are associated (or correlated) with Construcciones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Construcciones y Auxiliar has no effect on the direction of Enags SA i.e., Enags SA and Construcciones go up and down completely randomly.

Pair Corralation between Enags SA and Construcciones

Assuming the 90 days trading horizon Enags SA is expected to under-perform the Construcciones. In addition to that, Enags SA is 1.57 times more volatile than Construcciones y Auxiliar. It trades about -0.21 of its total potential returns per unit of risk. Construcciones y Auxiliar is currently generating about 0.12 per unit of volatility. If you would invest  3,385  in Construcciones y Auxiliar on October 11, 2024 and sell it today you would earn a total of  60.00  from holding Construcciones y Auxiliar or generate 1.77% return on investment over 90 days.

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

Enags SA  vs.  Construcciones y Auxiliar

Enags SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Enags SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Construcciones y Auxiliar

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Enags SA and Construcciones

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

The idea behind Enags SA and Construcciones y Auxiliar 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.