Correlation Between Grupo Catalana and Arteche Lantegi

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

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

Diversification Opportunities for Grupo Catalana and Arteche Lantegi

0.72

Correlation Coefficient

Grupo Catalana  Arteche Lantegi

Poor diversification

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

Pair Corralation between Grupo Catalana and Arteche Lantegi

Assuming the 90 days trading horizon Grupo Catalana is expected to generate 30.18 times less return on investment than Arteche Lantegi. But when comparing it to its historical volatility, Grupo Catalana Occidente is 27.59 times less risky than Arteche Lantegi. It trades about 0.19 of its potential returns per unit of risk. Arteche Lantegi Elkartea is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  792.00  in Arteche Lantegi Elkartea on April 24, 2025 and sell it today you would earn a total of  378.00  from holding Arteche Lantegi Elkartea or generate 47.73% return on investment over 90 days.

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

Grupo Catalana Occidente  vs.  Arteche Lantegi Elkartea

Grupo Catalana Occidente

Risk-Adjusted Performance

Good

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 current stock price tumult, may contribute to shorter-term losses for the shareholders.

Arteche Lantegi Elkartea

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Arteche Lantegi Elkartea are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Arteche Lantegi exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Grupo Catalana and Arteche Lantegi

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

The idea behind Grupo Catalana Occidente and Arteche Lantegi Elkartea 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.