Correlation Between IAR SA and Remarul 16
Can any of the company-specific risk be diversified away by investing in both IAR SA and Remarul 16 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 IAR SA and Remarul 16 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IAR SA and Remarul 16 Februarie, you can compare the effects of market volatilities on IAR SA and Remarul 16 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 IAR SA with a short position of Remarul 16. Check out your portfolio center. Please also check ongoing floating volatility patterns of IAR SA and Remarul 16.
Diversification Opportunities for IAR SA and Remarul 16
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between IAR and Remarul is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding IAR SA and Remarul 16 Februarie in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Remarul 16 Februarie and IAR 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 IAR SA are associated (or correlated) with Remarul 16. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Remarul 16 Februarie has no effect on the direction of IAR SA i.e., IAR SA and Remarul 16 go up and down completely randomly.
Pair Corralation between IAR SA and Remarul 16
Assuming the 90 days trading horizon IAR SA is expected to generate 3.11 times less return on investment than Remarul 16. But when comparing it to its historical volatility, IAR SA is 2.81 times less risky than Remarul 16. It trades about 0.05 of its potential returns per unit of risk. Remarul 16 Februarie is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 1,980 in Remarul 16 Februarie on August 26, 2024 and sell it today you would earn a total of 740.00 from holding Remarul 16 Februarie or generate 37.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 48.89% |
| Values | Daily Returns |
IAR SA vs. Remarul 16 Februarie
Performance |
| Timeline |
| IAR SA |
| Remarul 16 Februarie |
IAR SA and Remarul 16 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IAR SA and Remarul 16
The main advantage of trading using opposite IAR SA and Remarul 16 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IAR SA position performs unexpectedly, Remarul 16 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 Remarul 16 will offset losses from the drop in Remarul 16's long position.The idea behind IAR SA and Remarul 16 Februarie 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.| Remarul 16 vs. Teraplast Bist | Remarul 16 vs. Comvex SA | Remarul 16 vs. IAR SA | Remarul 16 vs. Cemacon Zalau |
Check out your portfolio center.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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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