Correlation Between Elaia Investment and Arteche Lantegi

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

By analyzing existing cross correlation between Elaia Investment Spain and Arteche Lantegi Elkartea, you can compare the effects of market volatilities on Elaia Investment and Arteche Lantegi 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 Elaia Investment with a short position of Arteche Lantegi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elaia Investment and Arteche Lantegi.

Diversification Opportunities for Elaia Investment and Arteche Lantegi

0.28

Correlation Coefficient

Elaia Investment  Arteche Lantegi

Modest diversification

The 3 months correlation between Elaia and Arteche is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Elaia Investment Spain and Arteche Lantegi Elkartea in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arteche Lantegi Elkartea and Elaia Investment 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 Elaia Investment Spain are associated (or correlated) with Arteche Lantegi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arteche Lantegi Elkartea has no effect on the direction of Elaia Investment i.e., Elaia Investment and Arteche Lantegi go up and down completely randomly.

Pair Corralation between Elaia Investment and Arteche Lantegi

Assuming the 90 days trading horizon Elaia Investment Spain is expected to under-perform the Arteche Lantegi. But the stock apears to be less risky and, when comparing its historical volatility, Elaia Investment Spain is 1.63 times less risky than Arteche Lantegi. The stock trades about -0.37 of its potential returns per unit of risk. The Arteche Lantegi Elkartea is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  745.00  in Arteche Lantegi Elkartea on December 30, 2024 and sell it today you would earn a total of  30.00  from holding Arteche Lantegi Elkartea or generate 4.03% return on investment over 90 days.

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

Elaia Investment Spain  vs.  Arteche Lantegi Elkartea

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.

Arteche Lantegi Elkartea

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Arteche Lantegi Elkartea are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Arteche Lantegi is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Elaia Investment and Arteche Lantegi

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

The idea behind Elaia Investment Spain and Arteche Lantegi Elkartea 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.