Correlation Between Viscofan and Grupo Catalana

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

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

Diversification Opportunities for Viscofan and Grupo Catalana

-0.36

Correlation Coefficient

Viscofan  Grupo Catalana

Very good diversification

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

Pair Corralation between Viscofan and Grupo Catalana

Assuming the 90 days trading horizon Viscofan is expected to under-perform the Grupo Catalana. But the stock apears to be less risky and, when comparing its historical volatility, Viscofan is 1.83 times less risky than Grupo Catalana. The stock trades about -0.32 of its potential returns per unit of risk. The Grupo Catalana Occidente is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest  3,615  in Grupo Catalana Occidente on October 25, 2024 and sell it today you would earn a total of  205.00  from holding Grupo Catalana Occidente or generate 5.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.0%
Values	Daily Returns

Viscofan  vs.  Grupo Catalana Occidente

Viscofan

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Viscofan has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Viscofan is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Grupo Catalana Occidente

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Grupo Catalana Occidente are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Grupo Catalana is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Viscofan and Grupo Catalana

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

The idea behind Viscofan and Grupo Catalana Occidente 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.