Correlation Between Industria and Elecnor SA

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

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

Diversification Opportunities for Industria and Elecnor SA

-0.59

Correlation Coefficient

Industria  Elecnor SA

Excellent diversification

The 3 months correlation between Industria and Elecnor is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Industria de Diseno and Elecnor SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elecnor SA and Industria 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 Industria de Diseno 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 Industria i.e., Industria and Elecnor SA go up and down completely randomly.

Pair Corralation between Industria and Elecnor SA

Assuming the 90 days trading horizon Industria de Diseno is expected to under-perform the Elecnor SA. But the stock apears to be less risky and, when comparing its historical volatility, Industria de Diseno is 1.68 times less risky than Elecnor SA. The stock trades about -0.16 of its potential returns per unit of risk. The Elecnor SA is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  1,815  in Elecnor SA on May 6, 2025 and sell it today you would earn a total of  480.00  from holding Elecnor SA or generate 26.45% return on investment over 90 days.

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

Industria de Diseno  vs.  Elecnor SA

Industria de Diseno

Risk-Adjusted Performance

Very Weak

Over the last 90 days Industria de Diseno 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 basic indicators remain rather sound which may send shares a bit higher in September 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Elecnor SA

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Elecnor SA are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Elecnor SA exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Industria and Elecnor SA

The main advantage of trading using opposite Industria and Elecnor SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Industria 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 Industria de Diseno 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.