Correlation Between Robot SA and Naturgy Energy

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

By analyzing existing cross correlation between Robot SA and Naturgy Energy Group, you can compare the effects of market volatilities on Robot SA and Naturgy Energy 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 Robot SA with a short position of Naturgy Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Robot SA and Naturgy Energy.

Diversification Opportunities for Robot SA and Naturgy Energy

0.4

Correlation Coefficient

Robot SA  Naturgy Energy

Very weak diversification

The 3 months correlation between Robot and Naturgy is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Robot SA and Naturgy Energy Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Naturgy Energy Group and Robot SA 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 Robot SA are associated (or correlated) with Naturgy Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Naturgy Energy Group has no effect on the direction of Robot SA i.e., Robot SA and Naturgy Energy go up and down completely randomly.

Pair Corralation between Robot SA and Naturgy Energy

Assuming the 90 days trading horizon Robot SA is expected to generate 1.25 times less return on investment than Naturgy Energy. In addition to that, Robot SA is 1.15 times more volatile than Naturgy Energy Group. It trades about 0.09 of its total potential returns per unit of risk. Naturgy Energy Group is currently generating about 0.13 per unit of volatility. If you would invest  2,336  in Naturgy Energy Group on December 30, 2024 and sell it today you would earn a total of  242.00  from holding Naturgy Energy Group or generate 10.36% return on investment over 90 days.

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

Robot SA  vs.  Naturgy Energy Group

Robot SA

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Robot SA are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Robot SA may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Naturgy Energy Group

Risk-Adjusted Performance

OK

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

Pair Trading with Robot SA and Naturgy Energy

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

The idea behind Robot SA and Naturgy Energy Group 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.