Correlation Between Bermas SA and Rompetrol Well

Can any of the company-specific risk be diversified away by investing in both Bermas SA and Rompetrol Well 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 Bermas SA and Rompetrol Well into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Bermas SA and Rompetrol Well, you can compare the effects of market volatilities on Bermas SA and Rompetrol Well 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 Bermas SA with a short position of Rompetrol Well. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bermas SA and Rompetrol Well.

Diversification Opportunities for Bermas SA and Rompetrol Well

-0.04

Correlation Coefficient

Bermas SA  Rompetrol Well

Good diversification

The 3 months correlation between Bermas and Rompetrol is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Bermas SA and Rompetrol Well in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rompetrol Well and Bermas SA 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 Bermas SA are associated (or correlated) with Rompetrol Well. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rompetrol Well has no effect on the direction of Bermas SA i.e., Bermas SA and Rompetrol Well go up and down completely randomly.

Pair Corralation between Bermas SA and Rompetrol Well

Assuming the 90 days trading horizon Bermas SA is expected to generate 1.72 times more return on investment than Rompetrol Well. However, Bermas SA is 1.72 times more volatile than Rompetrol Well. It trades about 0.05 of its potential returns per unit of risk. Rompetrol Well is currently generating about -0.01 per unit of risk. If you would invest  280.00  in Bermas SA on September 12, 2024 and sell it today you would earn a total of  20.00  from holding Bermas SA or generate 7.14% return on investment over 90 days.

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

Bermas SA  vs.  Rompetrol Well

Bermas SA

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Bermas SA are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating primary indicators, Bermas SA may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Rompetrol Well

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rompetrol Well has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Rompetrol Well is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Bermas SA and Rompetrol Well

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

The idea behind Bermas SA and Rompetrol Well 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 Transaction History module to view history of all your transactions and understand their impact on performance.