Correlation Between Brait SE and Trematon Capital

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

By analyzing existing cross correlation between Brait SE and Trematon Capital Investments, you can compare the effects of market volatilities on Brait SE and Trematon Capital 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 Trematon Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brait SE and Trematon Capital.

Diversification Opportunities for Brait SE and Trematon Capital

-0.43

Correlation Coefficient

Brait SE  Trematon Capital

Very good diversification

The 3 months correlation between Brait and Trematon is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Brait SE and Trematon Capital Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trematon Capital Inv 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 Trematon Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trematon Capital Inv has no effect on the direction of Brait SE i.e., Brait SE and Trematon Capital go up and down completely randomly.

Pair Corralation between Brait SE and Trematon Capital

Assuming the 90 days trading horizon Brait SE is expected to generate 0.92 times more return on investment than Trematon Capital. However, Brait SE is 1.09 times less risky than Trematon Capital. It trades about 0.17 of its potential returns per unit of risk. Trematon Capital Investments is currently generating about 0.05 per unit of risk. If you would invest  9,800  in Brait SE on September 29, 2024 and sell it today you would earn a total of  10,200  from holding Brait SE or generate 104.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Brait SE  vs.  Trematon Capital Investments

Brait SE

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Brait SE are ranked lower than 19 (%) 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.

Trematon Capital Inv

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Trematon Capital Investments are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Trematon Capital may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Brait SE and Trematon Capital

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

The idea behind Brait SE and Trematon Capital Investments 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.

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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.