Correlation Between Electroprecizia and Romcab SA

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

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

Diversification Opportunities for Electroprecizia and Romcab SA

-0.02

Correlation Coefficient

Electroprecizia  Romcab SA

Good diversification

The 3 months correlation between Electroprecizia and Romcab is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Electroprecizia SA and Romcab SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Romcab SA and Electroprecizia 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 Electroprecizia SA are associated (or correlated) with Romcab SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Romcab SA has no effect on the direction of Electroprecizia i.e., Electroprecizia and Romcab SA go up and down completely randomly.

Pair Corralation between Electroprecizia and Romcab SA

Assuming the 90 days trading horizon Electroprecizia is expected to generate 10.0 times less return on investment than Romcab SA. But when comparing it to its historical volatility, Electroprecizia SA is 2.39 times less risky than Romcab SA. It trades about 0.03 of its potential returns per unit of risk. Romcab SA is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  2.08  in Romcab SA on December 26, 2024 and sell it today you would earn a total of  1.52  from holding Romcab SA or generate 73.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.28%
Values	Daily Returns

Electroprecizia SA  vs.  Romcab SA

Electroprecizia SA

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Electroprecizia SA are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Electroprecizia may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Romcab SA

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Romcab SA are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Romcab SA displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Electroprecizia and Romcab SA

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

The idea behind Electroprecizia SA and Romcab 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.