Correlation Between GEK TERNA and Technical Olympic

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

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

Diversification Opportunities for GEK TERNA and Technical Olympic

0.3

Correlation Coefficient

GEK TERNA  Technical Olympic

Weak diversification

The 3 months correlation between GEK and Technical is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding GEK TERNA Holdings and Technical Olympic SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Technical Olympic and GEK TERNA 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 GEK TERNA Holdings are associated (or correlated) with Technical Olympic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Technical Olympic has no effect on the direction of GEK TERNA i.e., GEK TERNA and Technical Olympic go up and down completely randomly.

Pair Corralation between GEK TERNA and Technical Olympic

Assuming the 90 days trading horizon GEK TERNA Holdings is expected to under-perform the Technical Olympic. But the stock apears to be less risky and, when comparing its historical volatility, GEK TERNA Holdings is 1.54 times less risky than Technical Olympic. The stock trades about -0.05 of its potential returns per unit of risk. The Technical Olympic SA is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  232.00  in Technical Olympic SA on December 2, 2024 and sell it today you would earn a total of  24.00  from holding Technical Olympic SA or generate 10.34% return on investment over 90 days.

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

GEK TERNA Holdings  vs.  Technical Olympic SA

GEK TERNA Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days GEK TERNA Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, GEK TERNA is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Technical Olympic

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Technical Olympic SA are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Technical Olympic may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with GEK TERNA and Technical Olympic

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

The idea behind GEK TERNA Holdings and Technical Olympic 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.