Correlation Between Romcab SA and Unisem SA

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

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

Diversification Opportunities for Romcab SA and Unisem SA

0.17

Correlation Coefficient

Romcab SA  Unisem SA

Average diversification

The 3 months correlation between Romcab and Unisem is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Romcab SA and Unisem SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unisem 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 Unisem SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Unisem SA has no effect on the direction of Romcab SA i.e., Romcab SA and Unisem SA go up and down completely randomly.

Pair Corralation between Romcab SA and Unisem SA

Assuming the 90 days trading horizon Romcab SA is expected to generate 1.9 times more return on investment than Unisem SA. However, Romcab SA is 1.9 times more volatile than Unisem SA. It trades about 0.3 of its potential returns per unit of risk. Unisem SA is currently generating about 0.0 per unit of risk. If you would invest  2.80  in Romcab SA on October 26, 2024 and sell it today you would earn a total of  4.90  from holding Romcab SA or generate 175.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.25%
Values	Daily Returns

Romcab SA  vs.  Unisem SA

Romcab SA

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Romcab SA are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Romcab SA displayed solid returns over the last few months and may actually be approaching a breakup point.

Unisem SA

Risk-Adjusted Performance

0 of 100

Insignificant

Over the last 90 days Unisem SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong forward indicators, Unisem SA is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Romcab SA and Unisem SA

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

The idea behind Romcab SA and Unisem 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.