Correlation Between Promateris and Romcab SA

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

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

Diversification Opportunities for Promateris and Romcab SA

0.67

Correlation Coefficient

Promateris  Romcab SA

Poor diversification

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

Pair Corralation between Promateris and Romcab SA

Assuming the 90 days trading horizon Promateris SA is expected to generate 0.77 times more return on investment than Romcab SA. However, Promateris SA is 1.3 times less risky than Romcab SA. It trades about -0.02 of its potential returns per unit of risk. Romcab SA is currently generating about -0.08 per unit of risk. If you would invest  1,080  in Promateris SA on October 10, 2024 and sell it today you would lose (410.00) from holding Promateris SA or give up 37.96% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	82.39%
Values	Daily Returns

Promateris SA  vs.  Romcab SA

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.

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.

Pair Trading with Promateris and Romcab SA

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

The idea behind Promateris SA and Romcab 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.

Check out your portfolio center.

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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.