Correlation Between Urbas Grupo and Duro Felguera

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

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

Diversification Opportunities for Urbas Grupo and Duro Felguera

-0.36

Correlation Coefficient

Urbas Grupo  Duro Felguera

Very good diversification

The 3 months correlation between Urbas and Duro is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Urbas Grupo Financiero and Duro Felguera in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Duro Felguera and Urbas Grupo 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 Urbas Grupo Financiero are associated (or correlated) with Duro Felguera. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Duro Felguera has no effect on the direction of Urbas Grupo i.e., Urbas Grupo and Duro Felguera go up and down completely randomly.

Pair Corralation between Urbas Grupo and Duro Felguera

Assuming the 90 days trading horizon Urbas Grupo Financiero is expected to under-perform the Duro Felguera. But the stock apears to be less risky and, when comparing its historical volatility, Urbas Grupo Financiero is 2.33 times less risky than Duro Felguera. The stock trades about -0.04 of its potential returns per unit of risk. The Duro Felguera is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  22.00  in Duro Felguera on December 19, 2024 and sell it today you would earn a total of  10.00  from holding Duro Felguera or generate 45.45% return on investment over 90 days.

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

Urbas Grupo Financiero  vs.  Duro Felguera

Urbas Grupo Financiero

Risk-Adjusted Performance

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 latest unsteady performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Duro Felguera

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Duro Felguera are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Duro Felguera exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Urbas Grupo and Duro Felguera

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

The idea behind Urbas Grupo Financiero and Duro Felguera 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.