Correlation Between Duro Felguera and ACS Actividades

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

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

Diversification Opportunities for Duro Felguera and ACS Actividades

-0.7

Correlation Coefficient

Duro Felguera  ACS Actividades

Excellent diversification

The 3 months correlation between Duro and ACS is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Duro Felguera and ACS Actividades de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ACS Actividades de and Duro Felguera 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 Duro Felguera are associated (or correlated) with ACS Actividades. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ACS Actividades de has no effect on the direction of Duro Felguera i.e., Duro Felguera and ACS Actividades go up and down completely randomly.

Pair Corralation between Duro Felguera and ACS Actividades

Assuming the 90 days trading horizon Duro Felguera is expected to generate 6.87 times more return on investment than ACS Actividades. However, Duro Felguera is 6.87 times more volatile than ACS Actividades de. It trades about 0.1 of its potential returns per unit of risk. ACS Actividades de is currently generating about 0.1 per unit of risk. If you would invest  22.00  in Duro Felguera on October 21, 2024 and sell it today you would earn a total of  2.00  from holding Duro Felguera or generate 9.09% return on investment over 90 days.

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

Duro Felguera  vs.  ACS Actividades de

Duro Felguera

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Duro Felguera has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

ACS Actividades de

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ACS Actividades de are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, ACS Actividades may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Duro Felguera and ACS Actividades

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

The idea behind Duro Felguera and ACS Actividades de 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 Global Correlations module to find global opportunities by holding instruments from different markets.