Correlation Between Ebro Foods and Labiana Health

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

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

Diversification Opportunities for Ebro Foods and Labiana Health

0.7

Correlation Coefficient

Ebro Foods  Labiana Health

Poor diversification

The 3 months correlation between Ebro and Labiana is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Ebro Foods and Labiana Health SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Labiana Health SA and Ebro Foods 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 Ebro Foods are associated (or correlated) with Labiana Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Labiana Health SA has no effect on the direction of Ebro Foods i.e., Ebro Foods and Labiana Health go up and down completely randomly.

Pair Corralation between Ebro Foods and Labiana Health

Assuming the 90 days trading horizon Ebro Foods is expected to generate 8.39 times less return on investment than Labiana Health. But when comparing it to its historical volatility, Ebro Foods is 4.11 times less risky than Labiana Health. It trades about 0.09 of its potential returns per unit of risk. Labiana Health SA is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  300.00  in Labiana Health SA on April 23, 2025 and sell it today you would earn a total of  94.00  from holding Labiana Health SA or generate 31.33% return on investment over 90 days.

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

Ebro Foods  vs.  Labiana Health SA

Ebro Foods

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ebro Foods are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Ebro Foods is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Labiana Health SA

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Labiana Health SA are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental drivers, Labiana Health exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ebro Foods and Labiana Health

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

The idea behind Ebro Foods and Labiana Health 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.