Correlation Between Energy Solar and Lar Espana

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

By analyzing existing cross correlation between Energy Solar Tech and Lar Espana Real, you can compare the effects of market volatilities on Energy Solar and Lar Espana 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 Energy Solar with a short position of Lar Espana. Check out your portfolio center. Please also check ongoing floating volatility patterns of Energy Solar and Lar Espana.

Diversification Opportunities for Energy Solar and Lar Espana

-0.8

Correlation Coefficient

Energy Solar  Lar Espana

Pay attention - limited upside

The 3 months correlation between Energy and Lar is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Energy Solar Tech and Lar Espana Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lar Espana Real and Energy Solar 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 Energy Solar Tech are associated (or correlated) with Lar Espana. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lar Espana Real has no effect on the direction of Energy Solar i.e., Energy Solar and Lar Espana go up and down completely randomly.

Pair Corralation between Energy Solar and Lar Espana

Assuming the 90 days trading horizon Energy Solar Tech is expected to under-perform the Lar Espana. In addition to that, Energy Solar is 2.49 times more volatile than Lar Espana Real. It trades about -0.01 of its total potential returns per unit of risk. Lar Espana Real is currently generating about 0.05 per unit of volatility. If you would invest  480.00  in Lar Espana Real on January 29, 2024 and sell it today you would earn a total of  202.00  from holding Lar Espana Real or generate 42.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	72.37%
Values	Daily Returns

Energy Solar Tech  vs.  Lar Espana Real

Energy Solar Tech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Energy Solar Tech 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 May 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Lar Espana Real

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Lar Espana Real are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Lar Espana may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pair Trading with Energy Solar and Lar Espana

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

The idea behind Energy Solar Tech and Lar Espana Real 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.