Correlation Between Duro Felguera and Energy Solar

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

By analyzing existing cross correlation between Duro Felguera and Energy Solar Tech, you can compare the effects of market volatilities on Duro Felguera and Energy Solar 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 Energy Solar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Duro Felguera and Energy Solar.

Diversification Opportunities for Duro Felguera and Energy Solar

0.56

Correlation Coefficient

Duro Felguera  Energy Solar

Very weak diversification

The 3 months correlation between Duro and Energy is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Duro Felguera and Energy Solar Tech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Energy Solar Tech 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 Energy Solar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Energy Solar Tech has no effect on the direction of Duro Felguera i.e., Duro Felguera and Energy Solar go up and down completely randomly.

Pair Corralation between Duro Felguera and Energy Solar

Assuming the 90 days trading horizon Duro Felguera is expected to under-perform the Energy Solar. In addition to that, Duro Felguera is 9.33 times more volatile than Energy Solar Tech. It trades about -0.2 of its total potential returns per unit of risk. Energy Solar Tech is currently generating about -0.27 per unit of volatility. If you would invest  303.00  in Energy Solar Tech on October 7, 2024 and sell it today you would lose (20.00) from holding Energy Solar Tech or give up 6.6% of portfolio value over 90 days.

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

Duro Felguera  vs.  Energy Solar Tech

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.

Energy Solar Tech

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Duro Felguera and Energy Solar

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

The idea behind Duro Felguera and Energy Solar Tech 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.