Correlation Between Fluidra and Gestamp Automocion

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

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

Diversification Opportunities for Fluidra and Gestamp Automocion

-0.55

Correlation Coefficient

Fluidra  Gestamp Automocion

Excellent diversification

The 3 months correlation between Fluidra and Gestamp is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Fluidra and Gestamp Automocion SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gestamp Automocion and Fluidra 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 Fluidra are associated (or correlated) with Gestamp Automocion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gestamp Automocion has no effect on the direction of Fluidra i.e., Fluidra and Gestamp Automocion go up and down completely randomly.

Pair Corralation between Fluidra and Gestamp Automocion

Assuming the 90 days trading horizon Fluidra is expected to under-perform the Gestamp Automocion. But the stock apears to be less risky and, when comparing its historical volatility, Fluidra is 1.37 times less risky than Gestamp Automocion. The stock trades about -0.03 of its potential returns per unit of risk. The Gestamp Automocion SA is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  237.00  in Gestamp Automocion SA on December 30, 2024 and sell it today you would earn a total of  27.00  from holding Gestamp Automocion SA or generate 11.39% return on investment over 90 days.

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

Fluidra  vs.  Gestamp Automocion SA

Fluidra

Risk-Adjusted Performance

Very Weak

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

Gestamp Automocion

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Gestamp Automocion SA are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Gestamp Automocion may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Fluidra and Gestamp Automocion

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

The idea behind Fluidra and Gestamp Automocion 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.