Correlation Between Romcab SA and Promateris

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

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

Diversification Opportunities for Romcab SA and Promateris

0.67

Correlation Coefficient

Romcab SA  Promateris

Poor diversification

The 3 months correlation between Romcab and Promateris is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Romcab SA and Promateris SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Promateris SA and Romcab 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 Romcab SA are associated (or correlated) with Promateris. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Promateris SA has no effect on the direction of Romcab SA i.e., Romcab SA and Promateris go up and down completely randomly.

Pair Corralation between Romcab SA and Promateris

Assuming the 90 days trading horizon Romcab SA is expected to under-perform the Promateris. But the stock apears to be less risky and, when comparing its historical volatility, Romcab SA is 1.11 times less risky than Promateris. The stock trades about -0.11 of its potential returns per unit of risk. The Promateris SA is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  770.00  in Promateris SA on October 10, 2024 and sell it today you would lose (100.00) from holding Promateris SA or give up 12.99% of portfolio value over 90 days.

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

Romcab SA  vs.  Promateris SA

Romcab SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Romcab SA 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 very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Promateris SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Promateris SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's essential indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Romcab SA and Promateris

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

The idea behind Romcab SA and Promateris 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 Global Correlations module to find global opportunities by holding instruments from different markets.