Correlation Between Solaria Energa and Grupo Catalana

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

By analyzing existing cross correlation between Solaria Energa y and Grupo Catalana Occidente, you can compare the effects of market volatilities on Solaria Energa and Grupo Catalana 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 Solaria Energa with a short position of Grupo Catalana. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solaria Energa and Grupo Catalana.

Diversification Opportunities for Solaria Energa and Grupo Catalana

0.81

Correlation Coefficient

Solaria Energa  Grupo Catalana

Very poor diversification

The 3 months correlation between Solaria and Grupo is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Solaria Energa y and Grupo Catalana Occidente in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Catalana Occidente and Solaria Energa 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 Solaria Energa y are associated (or correlated) with Grupo Catalana. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo Catalana Occidente has no effect on the direction of Solaria Energa i.e., Solaria Energa and Grupo Catalana go up and down completely randomly.

Pair Corralation between Solaria Energa and Grupo Catalana

Assuming the 90 days trading horizon Solaria Energa y is expected to under-perform the Grupo Catalana. In addition to that, Solaria Energa is 2.71 times more volatile than Grupo Catalana Occidente. It trades about -0.19 of its total potential returns per unit of risk. Grupo Catalana Occidente is currently generating about -0.07 per unit of volatility. If you would invest  3,873  in Grupo Catalana Occidente on September 13, 2024 and sell it today you would lose (163.00) from holding Grupo Catalana Occidente or give up 4.21% of portfolio value over 90 days.

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

Solaria Energa y  vs.  Grupo Catalana Occidente

Solaria Energa y

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Solaria Energa y 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 January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Grupo Catalana Occidente

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Solaria Energa and Grupo Catalana

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

The idea behind Solaria Energa y and Grupo Catalana Occidente 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.