Correlation Between Indstrias Romi and METISA Metalrgica
Can any of the company-specific risk be diversified away by investing in both Indstrias Romi and METISA Metalrgica 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 Indstrias Romi and METISA Metalrgica into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Indstrias Romi SA and METISA Metalrgica Timboense, you can compare the effects of market volatilities on Indstrias Romi and METISA Metalrgica 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 Indstrias Romi with a short position of METISA Metalrgica. Check out your portfolio center. Please also check ongoing floating volatility patterns of Indstrias Romi and METISA Metalrgica.
Diversification Opportunities for Indstrias Romi and METISA Metalrgica
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Indstrias and METISA is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Indstrias Romi SA and METISA Metalrgica Timboense in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on METISA Metalrgica and Indstrias Romi 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 Indstrias Romi SA are associated (or correlated) with METISA Metalrgica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of METISA Metalrgica has no effect on the direction of Indstrias Romi i.e., Indstrias Romi and METISA Metalrgica go up and down completely randomly.
Pair Corralation between Indstrias Romi and METISA Metalrgica
Assuming the 90 days trading horizon Indstrias Romi SA is expected to under-perform the METISA Metalrgica. But the stock apears to be less risky and, when comparing its historical volatility, Indstrias Romi SA is 1.99 times less risky than METISA Metalrgica. The stock trades about -0.09 of its potential returns per unit of risk. The METISA Metalrgica Timboense is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 3,595 in METISA Metalrgica Timboense on August 29, 2024 and sell it today you would earn a total of 5.00 from holding METISA Metalrgica Timboense or generate 0.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Indstrias Romi SA vs. METISA Metalrgica Timboense
Performance |
| Timeline |
| Indstrias Romi SA |
| METISA Metalrgica |
Indstrias Romi and METISA Metalrgica Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Indstrias Romi and METISA Metalrgica
The main advantage of trading using opposite Indstrias Romi and METISA Metalrgica positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Indstrias Romi position performs unexpectedly, METISA Metalrgica 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 METISA Metalrgica will offset losses from the drop in METISA Metalrgica's long position.| Indstrias Romi vs. SLC Agrcola SA | Indstrias Romi vs. Camil Alimentos SA | Indstrias Romi vs. Marcopolo SA | Indstrias Romi vs. Movida Participaes SA |
| METISA Metalrgica vs. Fras le SA | METISA Metalrgica vs. Indstrias Romi SA | METISA Metalrgica vs. Clave Indices De | METISA Metalrgica vs. BTG Pactual Logstica |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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