Correlation Between Urbas Grupo and Elaia Investment

Can any of the company-specific risk be diversified away by investing in both Urbas Grupo and Elaia Investment 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 Elaia Investment 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 Elaia Investment Spain, you can compare the effects of market volatilities on Urbas Grupo and Elaia Investment 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 Elaia Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Urbas Grupo and Elaia Investment.

Diversification Opportunities for Urbas Grupo and Elaia Investment

0.4

Correlation Coefficient

Urbas Grupo  Elaia Investment

Very weak diversification

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

Pair Corralation between Urbas Grupo and Elaia Investment

Assuming the 90 days trading horizon Urbas Grupo Financiero is expected to generate 0.94 times more return on investment than Elaia Investment. However, Urbas Grupo Financiero is 1.06 times less risky than Elaia Investment. It trades about -0.02 of its potential returns per unit of risk. Elaia Investment Spain is currently generating about -0.3 per unit of risk. If you would invest  0.26  in Urbas Grupo Financiero on December 20, 2024 and sell it today you would lose (0.02) from holding Urbas Grupo Financiero or give up 7.69% of portfolio value over 90 days.

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

Urbas Grupo Financiero  vs.  Elaia Investment Spain

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 rather sound basic indicators, Urbas Grupo is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Elaia Investment Spain

Risk-Adjusted Performance

Very Weak

Over the last 90 days Elaia Investment Spain 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 fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Urbas Grupo and Elaia Investment

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

The idea behind Urbas Grupo Financiero and Elaia Investment Spain 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.