Correlation Between Tubacex SA and Ercros

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

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

Diversification Opportunities for Tubacex SA and Ercros

-0.11

Correlation Coefficient

Tubacex SA  Ercros

Good diversification

The 3 months correlation between Tubacex and Ercros is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Tubacex SA and Ercros in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ercros and Tubacex SA 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 Tubacex SA are associated (or correlated) with Ercros. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ercros has no effect on the direction of Tubacex SA i.e., Tubacex SA and Ercros go up and down completely randomly.

Pair Corralation between Tubacex SA and Ercros

Assuming the 90 days trading horizon Tubacex SA is expected to generate 1.62 times more return on investment than Ercros. However, Tubacex SA is 1.62 times more volatile than Ercros. It trades about 0.03 of its potential returns per unit of risk. Ercros is currently generating about 0.04 per unit of risk. If you would invest  360.00  in Tubacex SA on April 24, 2025 and sell it today you would earn a total of  11.00  from holding Tubacex SA or generate 3.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Tubacex SA  vs.  Ercros

Tubacex SA

Risk-Adjusted Performance

Weak

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

Ercros

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ercros are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Ercros is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Tubacex SA and Ercros

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

The idea behind Tubacex SA and Ercros 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.