Correlation Between Copa Holdings and Roma Green

Can any of the company-specific risk be diversified away by investing in both Copa Holdings and Roma Green 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 Copa Holdings and Roma Green into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Copa Holdings and Roma Green

-0.36

Correlation Coefficient

Copa Holdings  Roma Green

Very good diversification

The 3 months correlation between Copa and Roma is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Copa Holdings SA and Roma Green Finance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Roma Green Finance and Copa Holdings 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 Copa Holdings SA are associated (or correlated) with Roma Green. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Roma Green Finance has no effect on the direction of Copa Holdings i.e., Copa Holdings and Roma Green go up and down completely randomly.

Pair Corralation between Copa Holdings and Roma Green

Considering the 90-day investment horizon Copa Holdings is expected to generate 1.35 times less return on investment than Roma Green. But when comparing it to its historical volatility, Copa Holdings SA is 3.78 times less risky than Roma Green. It trades about 0.08 of its potential returns per unit of risk. Roma Green Finance is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  80.00  in Roma Green Finance on December 17, 2024 and sell it today you would lose (2.00) from holding Roma Green Finance or give up 2.5% of portfolio value over 90 days.

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

Copa Holdings SA  vs.  Roma Green Finance

Copa Holdings SA

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Copa Holdings SA are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat abnormal basic indicators, Copa Holdings may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Roma Green Finance

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Roma Green Finance are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting primary indicators, Roma Green may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Copa Holdings and Roma Green

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

The idea behind Copa Holdings SA and Roma Green Finance 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.