Correlation Between Inepar SA and Recrusul

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

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

Diversification Opportunities for Inepar SA and Recrusul

0.63

Correlation Coefficient

Inepar SA  Recrusul

Poor diversification

The 3 months correlation between Inepar and Recrusul is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Inepar SA Indstria and Recrusul SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Recrusul SA and Inepar SA 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 Inepar SA Indstria 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 Inepar SA i.e., Inepar SA and Recrusul go up and down completely randomly.

Pair Corralation between Inepar SA and Recrusul

Assuming the 90 days trading horizon Inepar SA Indstria is expected to under-perform the Recrusul. But the preferred stock apears to be less risky and, when comparing its historical volatility, Inepar SA Indstria is 2.24 times less risky than Recrusul. The preferred stock trades about -0.23 of its potential returns per unit of risk. The Recrusul SA is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  645.00  in Recrusul SA on September 5, 2024 and sell it today you would lose (155.00) from holding Recrusul SA or give up 24.03% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.41%
Values	Daily Returns

Inepar SA Indstria  vs.  Recrusul SA

Inepar SA Indstria

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Inepar SA Indstria 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 Preferred Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Recrusul SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Recrusul 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 January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Inepar SA and Recrusul

The main advantage of trading using opposite Inepar SA and Recrusul positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Inepar SA 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 Inepar SA Indstria 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.