Correlation Between Repsol and ACS Actividades

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

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

Diversification Opportunities for Repsol and ACS Actividades

0.66

Correlation Coefficient

Repsol  ACS Actividades

Poor diversification

The 3 months correlation between Repsol and ACS is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Repsol 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 Repsol 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 Repsol 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 Repsol i.e., Repsol and ACS Actividades go up and down completely randomly.

Pair Corralation between Repsol and ACS Actividades

Assuming the 90 days trading horizon Repsol is expected to generate 1.04 times less return on investment than ACS Actividades. In addition to that, Repsol is 2.26 times more volatile than ACS Actividades de. It trades about 0.17 of its total potential returns per unit of risk. ACS Actividades de is currently generating about 0.41 per unit of volatility. If you would invest  4,852  in ACS Actividades de on December 4, 2024 and sell it today you would earn a total of  398.00  from holding ACS Actividades de or generate 8.2% return on investment over 90 days.

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

Repsol  vs.  ACS Actividades de

Repsol

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Repsol are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Repsol may actually be approaching a critical reversion point that can send shares even higher in April 2025.

ACS Actividades de

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ACS Actividades de are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, ACS Actividades exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Repsol and ACS Actividades

The main advantage of trading using opposite Repsol and ACS Actividades positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Repsol 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 Repsol 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.

Check out your portfolio center.

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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.