Correlation Between Romcab SA and Societatea Nationala

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

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

Diversification Opportunities for Romcab SA and Societatea Nationala

0.6

Correlation Coefficient

Romcab SA  Societatea Nationala

Poor diversification

The 3 months correlation between Romcab and Societatea is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Romcab SA and Societatea Nationala de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Societatea Nationala 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 Societatea Nationala. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Societatea Nationala has no effect on the direction of Romcab SA i.e., Romcab SA and Societatea Nationala go up and down completely randomly.

Pair Corralation between Romcab SA and Societatea Nationala

Assuming the 90 days trading horizon Romcab SA is expected to under-perform the Societatea Nationala. In addition to that, Romcab SA is 3.4 times more volatile than Societatea Nationala de. It trades about -0.08 of its total potential returns per unit of risk. Societatea Nationala de is currently generating about 0.07 per unit of volatility. If you would invest  359.00  in Societatea Nationala de on October 10, 2024 and sell it today you would earn a total of  160.00  from holding Societatea Nationala de or generate 44.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	97.75%
Values	Daily Returns

Romcab SA  vs.  Societatea Nationala de

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.

Societatea Nationala

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Societatea Nationala de has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's technical and fundamental 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 Societatea Nationala

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

The idea behind Romcab SA and Societatea Nationala de 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.