Correlation Between Industria and Cellnex Telecom

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

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

Diversification Opportunities for Industria and Cellnex Telecom

0.48

Correlation Coefficient

Industria  Cellnex Telecom

Very weak diversification

The 3 months correlation between Industria and Cellnex is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Industria de Diseno and Cellnex Telecom SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cellnex Telecom SA and Industria 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 Industria de Diseno are associated (or correlated) with Cellnex Telecom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cellnex Telecom SA has no effect on the direction of Industria i.e., Industria and Cellnex Telecom go up and down completely randomly.

Pair Corralation between Industria and Cellnex Telecom

Assuming the 90 days trading horizon Industria de Diseno is expected to under-perform the Cellnex Telecom. But the stock apears to be less risky and, when comparing its historical volatility, Industria de Diseno is 1.07 times less risky than Cellnex Telecom. The stock trades about -0.02 of its potential returns per unit of risk. The Cellnex Telecom SA is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  3,390  in Cellnex Telecom SA on December 1, 2024 and sell it today you would earn a total of  54.00  from holding Cellnex Telecom SA or generate 1.59% return on investment over 90 days.

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

Industria de Diseno  vs.  Cellnex Telecom SA

Industria de Diseno

Risk-Adjusted Performance

Very Weak

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

Cellnex Telecom SA

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Cellnex Telecom SA are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Cellnex Telecom is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Industria and Cellnex Telecom

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

The idea behind Industria de Diseno and Cellnex Telecom 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 Transaction History module to view history of all your transactions and understand their impact on performance.