Correlation Between Fundo De and Indstrias Romi

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

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

Diversification Opportunities for Fundo De and Indstrias Romi

0.84

Correlation Coefficient

Fundo De  Indstrias Romi

Very poor diversification

The 3 months correlation between Fundo and Indstrias is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Fundo de Investimento and Indstrias Romi SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indstrias Romi SA and Fundo De 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 Fundo de Investimento are associated (or correlated) with Indstrias Romi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indstrias Romi SA has no effect on the direction of Fundo De i.e., Fundo De and Indstrias Romi go up and down completely randomly.

Pair Corralation between Fundo De and Indstrias Romi

Assuming the 90 days trading horizon Fundo de Investimento is expected to generate 0.44 times more return on investment than Indstrias Romi. However, Fundo de Investimento is 2.29 times less risky than Indstrias Romi. It trades about -0.2 of its potential returns per unit of risk. Indstrias Romi SA is currently generating about -0.16 per unit of risk. If you would invest  5,314  in Fundo de Investimento on August 31, 2024 and sell it today you would lose (412.00) from holding Fundo de Investimento or give up 7.75% of portfolio value over 90 days.

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

Fundo de Investimento  vs.  Indstrias Romi SA

Fundo de Investimento

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fundo de Investimento has generated negative risk-adjusted returns adding no value to fund investors. Despite latest weak performance, the Fund's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Indstrias Romi SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Indstrias Romi SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in December 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Fundo De and Indstrias Romi

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

The idea behind Fundo de Investimento and Indstrias Romi 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..