Correlation Between Cresud SACIF and Royal Bank

Can any of the company-specific risk be diversified away by investing in both Cresud SACIF and Royal Bank 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 Cresud SACIF and Royal Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Cresud SACIF y and Royal Bank of, you can compare the effects of market volatilities on Cresud SACIF and Royal Bank 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 Cresud SACIF with a short position of Royal Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cresud SACIF and Royal Bank.

Diversification Opportunities for Cresud SACIF and Royal Bank

0.65

Correlation Coefficient

Cresud SACIF  Royal Bank

Poor diversification

The 3 months correlation between Cresud and Royal is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Cresud SACIF y and Royal Bank of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Royal Bank and Cresud SACIF 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 Cresud SACIF y are associated (or correlated) with Royal Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Royal Bank has no effect on the direction of Cresud SACIF i.e., Cresud SACIF and Royal Bank go up and down completely randomly.

Pair Corralation between Cresud SACIF and Royal Bank

Assuming the 90 days horizon Cresud SACIF y is expected to generate 5.88 times more return on investment than Royal Bank. However, Cresud SACIF is 5.88 times more volatile than Royal Bank of. It trades about 0.09 of its potential returns per unit of risk. Royal Bank of is currently generating about 0.16 per unit of risk. If you would invest  815.00  in Cresud SACIF y on October 6, 2024 and sell it today you would earn a total of  529.00  from holding Cresud SACIF y or generate 64.91% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.6%
Values	Daily Returns

Cresud SACIF y  vs.  Royal Bank of

Cresud SACIF y

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Cresud SACIF y are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, Cresud SACIF showed solid returns over the last few months and may actually be approaching a breakup point.

Royal Bank

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Royal Bank of are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable fundamental drivers, Royal Bank is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Cresud SACIF and Royal Bank

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

The idea behind Cresud SACIF y and Royal Bank of 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.