Correlation Between Cellnex Telecom and Adolfo Dominguez

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

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

Diversification Opportunities for Cellnex Telecom and Adolfo Dominguez

-0.59

Correlation Coefficient

Cellnex Telecom  Adolfo Dominguez

Excellent diversification

The 3 months correlation between Cellnex and Adolfo is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Cellnex Telecom SA and Adolfo Dominguez SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adolfo Dominguez and Cellnex Telecom 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 Cellnex Telecom SA are associated (or correlated) with Adolfo Dominguez. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adolfo Dominguez has no effect on the direction of Cellnex Telecom i.e., Cellnex Telecom and Adolfo Dominguez go up and down completely randomly.

Pair Corralation between Cellnex Telecom and Adolfo Dominguez

Assuming the 90 days trading horizon Cellnex Telecom SA is expected to under-perform the Adolfo Dominguez. But the stock apears to be less risky and, when comparing its historical volatility, Cellnex Telecom SA is 1.09 times less risky than Adolfo Dominguez. The stock trades about -0.03 of its potential returns per unit of risk. The Adolfo Dominguez SA is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  491.00  in Adolfo Dominguez SA on September 4, 2024 and sell it today you would earn a total of  13.00  from holding Adolfo Dominguez SA or generate 2.65% return on investment over 90 days.

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

Cellnex Telecom SA  vs.  Adolfo Dominguez SA

Cellnex Telecom SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cellnex Telecom SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Cellnex Telecom is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Adolfo Dominguez

Risk-Adjusted Performance

2 of 100

Weak

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

Pair Trading with Cellnex Telecom and Adolfo Dominguez

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

The idea behind Cellnex Telecom SA and Adolfo Dominguez 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.

Check out your portfolio center.

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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.