Correlation Between Brait SE and Rex Trueform

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

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

Diversification Opportunities for Brait SE and Rex Trueform

-0.37

Correlation Coefficient

Brait SE  Rex Trueform

Very good diversification

The 3 months correlation between Brait and Rex is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Brait SE and Rex Trueform Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rex Trueform Group and Brait SE 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 Brait SE are associated (or correlated) with Rex Trueform. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rex Trueform Group has no effect on the direction of Brait SE i.e., Brait SE and Rex Trueform go up and down completely randomly.

Pair Corralation between Brait SE and Rex Trueform

Assuming the 90 days trading horizon Brait SE is expected to generate 2.24 times more return on investment than Rex Trueform. However, Brait SE is 2.24 times more volatile than Rex Trueform Group. It trades about 0.29 of its potential returns per unit of risk. Rex Trueform Group is currently generating about -0.1 per unit of risk. If you would invest  13,300  in Brait SE on September 23, 2024 and sell it today you would earn a total of  6,700  from holding Brait SE or generate 50.38% return on investment over 90 days.

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

Brait SE  vs.  Rex Trueform Group

Brait SE

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Brait SE are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Brait SE exhibited solid returns over the last few months and may actually be approaching a breakup point.

Rex Trueform Group

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Brait SE and Rex Trueform

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

The idea behind Brait SE and Rex Trueform Group 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.