Correlation Between GRUPUL INDUSTRIAL and AROBS TRANSILVANIA

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

By analyzing existing cross correlation between GRUPUL INDUSTRIAL ELECTROCONTACT and AROBS TRANSILVANIA SOFTWARE, you can compare the effects of market volatilities on GRUPUL INDUSTRIAL and AROBS TRANSILVANIA 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 GRUPUL INDUSTRIAL with a short position of AROBS TRANSILVANIA. Check out your portfolio center. Please also check ongoing floating volatility patterns of GRUPUL INDUSTRIAL and AROBS TRANSILVANIA.

Diversification Opportunities for GRUPUL INDUSTRIAL and AROBS TRANSILVANIA

-0.69

Correlation Coefficient

GRUPUL INDUSTRIAL  AROBS TRANSILVANIA

Excellent diversification

The 3 months correlation between GRUPUL and AROBS is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding GRUPUL INDUSTRIAL ELECTROCONTA and AROBS TRANSILVANIA SOFTWARE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AROBS TRANSILVANIA and GRUPUL INDUSTRIAL 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 GRUPUL INDUSTRIAL ELECTROCONTACT are associated (or correlated) with AROBS TRANSILVANIA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AROBS TRANSILVANIA has no effect on the direction of GRUPUL INDUSTRIAL i.e., GRUPUL INDUSTRIAL and AROBS TRANSILVANIA go up and down completely randomly.

Pair Corralation between GRUPUL INDUSTRIAL and AROBS TRANSILVANIA

Assuming the 90 days trading horizon GRUPUL INDUSTRIAL ELECTROCONTACT is expected to generate 3.93 times more return on investment than AROBS TRANSILVANIA. However, GRUPUL INDUSTRIAL is 3.93 times more volatile than AROBS TRANSILVANIA SOFTWARE. It trades about 0.08 of its potential returns per unit of risk. AROBS TRANSILVANIA SOFTWARE is currently generating about -0.19 per unit of risk. If you would invest  4.45  in GRUPUL INDUSTRIAL ELECTROCONTACT on December 30, 2024 and sell it today you would earn a total of  0.95  from holding GRUPUL INDUSTRIAL ELECTROCONTACT or generate 21.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.33%
Values	Daily Returns

GRUPUL INDUSTRIAL ELECTROCONTA  vs.  AROBS TRANSILVANIA SOFTWARE

GRUPUL INDUSTRIAL

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in GRUPUL INDUSTRIAL ELECTROCONTACT are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, GRUPUL INDUSTRIAL displayed solid returns over the last few months and may actually be approaching a breakup point.

AROBS TRANSILVANIA

Risk-Adjusted Performance

Very Weak

Over the last 90 days AROBS TRANSILVANIA SOFTWARE has generated negative risk-adjusted returns adding no value to investors with long positions. Even with uncertain performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with GRUPUL INDUSTRIAL and AROBS TRANSILVANIA

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

The idea behind GRUPUL INDUSTRIAL ELECTROCONTACT and AROBS TRANSILVANIA SOFTWARE 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.