Correlation Between Elecnor SA and Catenon SA

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

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

Diversification Opportunities for Elecnor SA and Catenon SA

-0.53

Correlation Coefficient

Elecnor SA  Catenon SA

Excellent diversification

The 3 months correlation between Elecnor and Catenon is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Elecnor SA and Catenon SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Catenon SA and Elecnor 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 Elecnor SA are associated (or correlated) with Catenon SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Catenon SA has no effect on the direction of Elecnor SA i.e., Elecnor SA and Catenon SA go up and down completely randomly.

Pair Corralation between Elecnor SA and Catenon SA

Assuming the 90 days trading horizon Elecnor SA is expected to generate 0.99 times more return on investment than Catenon SA. However, Elecnor SA is 1.01 times less risky than Catenon SA. It trades about 0.11 of its potential returns per unit of risk. Catenon SA is currently generating about -0.05 per unit of risk. If you would invest  1,497  in Elecnor SA on October 26, 2024 and sell it today you would earn a total of  221.00  from holding Elecnor SA or generate 14.76% return on investment over 90 days.

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

Elecnor SA  vs.  Catenon SA

Elecnor SA

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Elecnor SA are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Elecnor SA exhibited solid returns over the last few months and may actually be approaching a breakup point.

Catenon SA

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Elecnor SA and Catenon SA

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

The idea behind Elecnor SA and Catenon 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.