Correlation Between GRUPO ECOENER and NEXTDC

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

By analyzing existing cross correlation between GRUPO ECOENER EO and NEXTDC LTD, you can compare the effects of market volatilities on GRUPO ECOENER and NEXTDC 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 GRUPO ECOENER with a short position of NEXTDC. Check out your portfolio center. Please also check ongoing floating volatility patterns of GRUPO ECOENER and NEXTDC.

Diversification Opportunities for GRUPO ECOENER and NEXTDC

-0.39

Correlation Coefficient

GRUPO ECOENER  NEXTDC

Very good diversification

The 3 months correlation between GRUPO and NEXTDC is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding GRUPO ECOENER EO and NEXTDC LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NEXTDC LTD and GRUPO ECOENER 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 GRUPO ECOENER EO are associated (or correlated) with NEXTDC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NEXTDC LTD has no effect on the direction of GRUPO ECOENER i.e., GRUPO ECOENER and NEXTDC go up and down completely randomly.

Pair Corralation between GRUPO ECOENER and NEXTDC

Assuming the 90 days horizon GRUPO ECOENER EO is expected to generate 0.89 times more return on investment than NEXTDC. However, GRUPO ECOENER EO is 1.13 times less risky than NEXTDC. It trades about 0.09 of its potential returns per unit of risk. NEXTDC LTD is currently generating about -0.08 per unit of risk. If you would invest  384.00  in GRUPO ECOENER EO on September 24, 2024 and sell it today you would earn a total of  41.00  from holding GRUPO ECOENER EO or generate 10.68% return on investment over 90 days.

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

GRUPO ECOENER EO  vs.  NEXTDC LTD

GRUPO ECOENER EO

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in GRUPO ECOENER EO are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, GRUPO ECOENER may actually be approaching a critical reversion point that can send shares even higher in January 2025.

NEXTDC LTD

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NEXTDC LTD has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with GRUPO ECOENER and NEXTDC

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

The idea behind GRUPO ECOENER EO and NEXTDC LTD 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 Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.