Correlation Between Dollar General and Recrusul

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

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

Diversification Opportunities for Dollar General and Recrusul

-0.18

Correlation Coefficient

Dollar General  Recrusul

Good diversification

The 3 months correlation between Dollar and Recrusul is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Dollar General and Recrusul SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Recrusul SA and Dollar General 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 Dollar General are associated (or correlated) with Recrusul. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Recrusul SA has no effect on the direction of Dollar General i.e., Dollar General and Recrusul go up and down completely randomly.

Pair Corralation between Dollar General and Recrusul

Assuming the 90 days trading horizon Dollar General is expected to under-perform the Recrusul. But the stock apears to be less risky and, when comparing its historical volatility, Dollar General is 5.55 times less risky than Recrusul. The stock trades about -0.06 of its potential returns per unit of risk. The Recrusul SA is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  960.00  in Recrusul SA on September 23, 2024 and sell it today you would lose (832.00) from holding Recrusul SA or give up 86.67% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Dollar General  vs.  Recrusul SA

Dollar General

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dollar General has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental indicators, Dollar General is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Recrusul SA

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Recrusul SA are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Recrusul unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dollar General and Recrusul

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

The idea behind Dollar General and Recrusul SA 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.