Correlation Between Grupo Catalana and Adriano Care

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

By analyzing existing cross correlation between Grupo Catalana Occidente and Adriano Care SOCIMI, you can compare the effects of market volatilities on Grupo Catalana and Adriano Care 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 Catalana with a short position of Adriano Care. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grupo Catalana and Adriano Care.

Diversification Opportunities for Grupo Catalana and Adriano Care

0.6

Correlation Coefficient

Grupo Catalana  Adriano Care

Poor diversification

The 3 months correlation between Grupo and Adriano is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Catalana Occidente and Adriano Care SOCIMI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adriano Care SOCIMI and Grupo Catalana 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 Catalana Occidente are associated (or correlated) with Adriano Care. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adriano Care SOCIMI has no effect on the direction of Grupo Catalana i.e., Grupo Catalana and Adriano Care go up and down completely randomly.

Pair Corralation between Grupo Catalana and Adriano Care

Assuming the 90 days trading horizon Grupo Catalana Occidente is expected to generate 17.97 times more return on investment than Adriano Care. However, Grupo Catalana is 17.97 times more volatile than Adriano Care SOCIMI. It trades about 0.23 of its potential returns per unit of risk. Adriano Care SOCIMI is currently generating about 0.12 per unit of risk. If you would invest  3,594  in Grupo Catalana Occidente on December 30, 2024 and sell it today you would earn a total of  1,311  from holding Grupo Catalana Occidente or generate 36.48% return on investment over 90 days.

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

Grupo Catalana Occidente  vs.  Adriano Care SOCIMI

Grupo Catalana Occidente

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Grupo Catalana Occidente are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Grupo Catalana exhibited solid returns over the last few months and may actually be approaching a breakup point.

Adriano Care SOCIMI

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Adriano Care SOCIMI are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Adriano Care 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 Catalana and Adriano Care

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

The idea behind Grupo Catalana Occidente and Adriano Care SOCIMI 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.