Correlation Between Pescanova and Atom Hoteles

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

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

Diversification Opportunities for Pescanova and Atom Hoteles

-0.32

Correlation Coefficient

Pescanova  Atom Hoteles

Very good diversification

The 3 months correlation between Pescanova and Atom is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Pescanova SA and Atom Hoteles Socimi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atom Hoteles Socimi and Pescanova 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 Pescanova SA are associated (or correlated) with Atom Hoteles. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atom Hoteles Socimi has no effect on the direction of Pescanova i.e., Pescanova and Atom Hoteles go up and down completely randomly.

Pair Corralation between Pescanova and Atom Hoteles

Assuming the 90 days trading horizon Pescanova is expected to generate 3.73 times less return on investment than Atom Hoteles. In addition to that, Pescanova is 1.22 times more volatile than Atom Hoteles Socimi. It trades about 0.03 of its total potential returns per unit of risk. Atom Hoteles Socimi is currently generating about 0.12 per unit of volatility. If you would invest  975.00  in Atom Hoteles Socimi on September 4, 2024 and sell it today you would earn a total of  405.00  from holding Atom Hoteles Socimi or generate 41.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

Pescanova SA  vs.  Atom Hoteles Socimi

Pescanova SA

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Pescanova SA are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Pescanova may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Atom Hoteles Socimi

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Atom Hoteles Socimi are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Atom Hoteles exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Pescanova and Atom Hoteles

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

The idea behind Pescanova SA and Atom Hoteles Socimi 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..