Correlation Between Refinaria and Nordon Indstrias
Can any of the company-specific risk be diversified away by investing in both Refinaria and Nordon Indstrias 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 Refinaria and Nordon Indstrias into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Refinaria de Petrleos and Nordon Indstrias Metalrgicas, you can compare the effects of market volatilities on Refinaria and Nordon Indstrias 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 Refinaria with a short position of Nordon Indstrias. Check out your portfolio center. Please also check ongoing floating volatility patterns of Refinaria and Nordon Indstrias.
Diversification Opportunities for Refinaria and Nordon Indstrias
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Refinaria and Nordon is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Refinaria de Petrleos and Nordon Indstrias Metalrgicas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nordon Indstrias Met and Refinaria 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 Refinaria de Petrleos are associated (or correlated) with Nordon Indstrias. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nordon Indstrias Met has no effect on the direction of Refinaria i.e., Refinaria and Nordon Indstrias go up and down completely randomly.
Pair Corralation between Refinaria and Nordon Indstrias
Assuming the 90 days trading horizon Refinaria is expected to generate 6.41 times less return on investment than Nordon Indstrias. But when comparing it to its historical volatility, Refinaria de Petrleos is 3.96 times less risky than Nordon Indstrias. It trades about 0.03 of its potential returns per unit of risk. Nordon Indstrias Metalrgicas is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 540.00 in Nordon Indstrias Metalrgicas on September 14, 2024 and sell it today you would earn a total of 120.00 from holding Nordon Indstrias Metalrgicas or generate 22.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.63% |
| Values | Daily Returns |
Refinaria de Petrleos vs. Nordon Indstrias Metalrgicas
Performance |
| Timeline |
| Refinaria de Petrleos |
| Nordon Indstrias Met |
Refinaria and Nordon Indstrias Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Refinaria and Nordon Indstrias
The main advantage of trading using opposite Refinaria and Nordon Indstrias positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Refinaria position performs unexpectedly, Nordon Indstrias 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 Nordon Indstrias will offset losses from the drop in Nordon Indstrias' long position.| Refinaria vs. Lupatech SA | Refinaria vs. Recrusul SA | Refinaria vs. PDG Realty SA | Refinaria vs. OSX Brasil SA |
| Nordon Indstrias vs. METISA Metalrgica Timboense | Nordon Indstrias vs. Lupatech SA | Nordon Indstrias vs. Refinaria de Petrleos | Nordon Indstrias vs. Electro Ao Altona |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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