Correlation Between Romcab SA and Uzinexport

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

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

Diversification Opportunities for Romcab SA and Uzinexport

0.33

Correlation Coefficient

Romcab SA  Uzinexport

Weak diversification

The 3 months correlation between Romcab and Uzinexport is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Romcab SA and Uzinexport SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Uzinexport 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 Uzinexport. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Uzinexport SA has no effect on the direction of Romcab SA i.e., Romcab SA and Uzinexport go up and down completely randomly.

Pair Corralation between Romcab SA and Uzinexport

Assuming the 90 days trading horizon Romcab SA is expected to under-perform the Uzinexport. But the stock apears to be less risky and, when comparing its historical volatility, Romcab SA is 1.85 times less risky than Uzinexport. The stock trades about -0.08 of its potential returns per unit of risk. The Uzinexport SA is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  52.00  in Uzinexport SA on October 10, 2024 and sell it today you would lose (2.00) from holding Uzinexport SA or give up 3.85% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	48.85%
Values	Daily Returns

Romcab SA  vs.  Uzinexport 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.

Uzinexport SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Uzinexport SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Uzinexport is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Romcab SA and Uzinexport

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

The idea behind Romcab SA and Uzinexport 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.