Correlation Between Teraplast Bist and Romcab SA
Can any of the company-specific risk be diversified away by investing in both Teraplast Bist and Romcab SA 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 Teraplast Bist and Romcab SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Teraplast Bist and Romcab SA, you can compare the effects of market volatilities on Teraplast Bist and Romcab SA 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 Teraplast Bist with a short position of Romcab SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Teraplast Bist and Romcab SA.
Diversification Opportunities for Teraplast Bist and Romcab SA
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Teraplast and Romcab is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Teraplast Bist and Romcab SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Romcab SA and Teraplast Bist 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 Teraplast Bist are associated (or correlated) with Romcab SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Romcab SA has no effect on the direction of Teraplast Bist i.e., Teraplast Bist and Romcab SA go up and down completely randomly.
Pair Corralation between Teraplast Bist and Romcab SA
Assuming the 90 days trading horizon Teraplast Bist is expected to generate 0.39 times more return on investment than Romcab SA. However, Teraplast Bist is 2.57 times less risky than Romcab SA. It trades about -0.02 of its potential returns per unit of risk. Romcab SA is currently generating about -0.06 per unit of risk. If you would invest 57.00 in Teraplast Bist on August 26, 2024 and sell it today you would lose (13.00) from holding Teraplast Bist or give up 22.81% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 97.97% |
| Values | Daily Returns |
Teraplast Bist vs. Romcab SA
Performance |
| Timeline |
| Teraplast Bist |
| Romcab SA |
Teraplast Bist and Romcab SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Teraplast Bist and Romcab SA
The main advantage of trading using opposite Teraplast Bist and Romcab SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Teraplast Bist position performs unexpectedly, Romcab SA 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 Romcab SA will offset losses from the drop in Romcab SA's long position.| Teraplast Bist vs. IHUNT TECHNOLOGY IMPORT EXPORT | Teraplast Bist vs. Infinity Capital Investments | Teraplast Bist vs. AROBS TRANSILVANIA SOFTWARE | Teraplast Bist vs. Digi Communications NV |
| Romcab SA vs. Infinity Capital Investments | Romcab SA vs. Patria Bank SA | Romcab SA vs. IM Vinaria Purcari | Romcab SA vs. AROBS TRANSILVANIA SOFTWARE |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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