Correlation Between Labiana Health and Grupo Ecoener

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

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

Diversification Opportunities for Labiana Health and Grupo Ecoener

-0.72

Correlation Coefficient

Labiana Health  Grupo Ecoener

Pay attention - limited upside

The 3 months correlation between Labiana and Grupo is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Labiana Health SA and Grupo Ecoener SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Ecoener SA and Labiana Health 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 Labiana Health SA are associated (or correlated) with Grupo Ecoener. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo Ecoener SA has no effect on the direction of Labiana Health i.e., Labiana Health and Grupo Ecoener go up and down completely randomly.

Pair Corralation between Labiana Health and Grupo Ecoener

Assuming the 90 days trading horizon Labiana Health SA is expected to generate 2.46 times more return on investment than Grupo Ecoener. However, Labiana Health is 2.46 times more volatile than Grupo Ecoener SA. It trades about 0.06 of its potential returns per unit of risk. Grupo Ecoener SA is currently generating about 0.13 per unit of risk. If you would invest  202.00  in Labiana Health SA on September 25, 2024 and sell it today you would earn a total of  6.00  from holding Labiana Health SA or generate 2.97% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

Labiana Health SA  vs.  Grupo Ecoener SA

Labiana Health SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Labiana Health SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's fundamental drivers remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Grupo Ecoener SA

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Grupo Ecoener SA are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Grupo Ecoener may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Labiana Health and Grupo Ecoener

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

The idea behind Labiana Health SA and Grupo Ecoener 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.