Correlation Between Castellana Properties and Elecnor SA

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

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

Diversification Opportunities for Castellana Properties and Elecnor SA

0.84

Correlation Coefficient

Castellana Properties  Elecnor SA

Very poor diversification

The 3 months correlation between Castellana and Elecnor is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Castellana Properties Socimi and Elecnor SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elecnor SA and Castellana Properties 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 Castellana Properties Socimi are associated (or correlated) with Elecnor SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elecnor SA has no effect on the direction of Castellana Properties i.e., Castellana Properties and Elecnor SA go up and down completely randomly.

Pair Corralation between Castellana Properties and Elecnor SA

Assuming the 90 days trading horizon Castellana Properties is expected to generate 1.6 times less return on investment than Elecnor SA. But when comparing it to its historical volatility, Castellana Properties Socimi is 3.29 times less risky than Elecnor SA. It trades about 0.26 of its potential returns per unit of risk. Elecnor SA is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  1,842  in Elecnor SA on September 13, 2024 and sell it today you would earn a total of  178.00  from holding Elecnor SA or generate 9.66% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.44%
Values	Daily Returns

Castellana Properties Socimi  vs.  Elecnor SA

Castellana Properties

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Castellana Properties Socimi are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Castellana Properties is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Elecnor SA

Risk-Adjusted Performance

9 of 100

OK

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

Pair Trading with Castellana Properties and Elecnor SA

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

The idea behind Castellana Properties Socimi and Elecnor SA 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.