Correlation Between Empresa Distribuidora and ReWalk Robotics

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

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

Diversification Opportunities for Empresa Distribuidora and ReWalk Robotics

-0.88

Correlation Coefficient

Empresa Distribuidora  ReWalk Robotics

Pay attention - limited upside

The 3 months correlation between Empresa and ReWalk is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding Empresa Distribuidora y and ReWalk Robotics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ReWalk Robotics and Empresa Distribuidora 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 Empresa Distribuidora y are associated (or correlated) with ReWalk Robotics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ReWalk Robotics has no effect on the direction of Empresa Distribuidora i.e., Empresa Distribuidora and ReWalk Robotics go up and down completely randomly.

Pair Corralation between Empresa Distribuidora and ReWalk Robotics

Considering the 90-day investment horizon Empresa Distribuidora y is expected to generate 0.7 times more return on investment than ReWalk Robotics. However, Empresa Distribuidora y is 1.42 times less risky than ReWalk Robotics. It trades about 0.11 of its potential returns per unit of risk. ReWalk Robotics is currently generating about -0.04 per unit of risk. If you would invest  1,811  in Empresa Distribuidora y on September 4, 2024 and sell it today you would earn a total of  2,403  from holding Empresa Distribuidora y or generate 132.69% return on investment over 90 days.

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

Empresa Distribuidora y  vs.  ReWalk Robotics

Empresa Distribuidora

Risk-Adjusted Performance

33 of 100

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Empresa Distribuidora y are ranked lower than 33 (%) of all global equities and portfolios over the last 90 days. In spite of very weak fundamental indicators, Empresa Distribuidora displayed solid returns over the last few months and may actually be approaching a breakup point.

ReWalk Robotics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ReWalk Robotics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Empresa Distribuidora and ReWalk Robotics

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

The idea behind Empresa Distribuidora y and ReWalk Robotics 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.