Correlation Between Duro Felguera and Urbas Grupo

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

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

Diversification Opportunities for Duro Felguera and Urbas Grupo

0.33

Correlation Coefficient

Duro Felguera  Urbas Grupo

Weak diversification

The 3 months correlation between Duro and Urbas is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Duro Felguera and Urbas Grupo Financiero in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Urbas Grupo Financiero 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 Urbas Grupo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Urbas Grupo Financiero has no effect on the direction of Duro Felguera i.e., Duro Felguera and Urbas Grupo go up and down completely randomly.

Pair Corralation between Duro Felguera and Urbas Grupo

Assuming the 90 days trading horizon Duro Felguera is expected to under-perform the Urbas Grupo. In addition to that, Duro Felguera is 2.91 times more volatile than Urbas Grupo Financiero. It trades about -0.22 of its total potential returns per unit of risk. Urbas Grupo Financiero is currently generating about -0.07 per unit of volatility. If you would invest  0.28  in Urbas Grupo Financiero on October 12, 2024 and sell it today you would lose (0.02) from holding Urbas Grupo Financiero or give up 7.14% of portfolio value over 90 days.

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

Duro Felguera  vs.  Urbas Grupo Financiero

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.

Urbas Grupo Financiero

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Urbas Grupo Financiero 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 basic 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.

Pair Trading with Duro Felguera and Urbas Grupo

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

The idea behind Duro Felguera and Urbas Grupo Financiero 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.