Correlation Between Rumo SA and Lupatech

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

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

Diversification Opportunities for Rumo SA and Lupatech

0.61

Correlation Coefficient

Rumo SA  Lupatech

Poor diversification

The 3 months correlation between Rumo and Lupatech is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Rumo SA and Lupatech SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lupatech SA and Rumo 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 Rumo SA are associated (or correlated) with Lupatech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lupatech SA has no effect on the direction of Rumo SA i.e., Rumo SA and Lupatech go up and down completely randomly.

Pair Corralation between Rumo SA and Lupatech

Assuming the 90 days trading horizon Rumo SA is expected to under-perform the Lupatech. But the stock apears to be less risky and, when comparing its historical volatility, Rumo SA is 1.23 times less risky than Lupatech. The stock trades about -0.1 of its potential returns per unit of risk. The Lupatech SA is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  132.00  in Lupatech SA on December 4, 2024 and sell it today you would lose (8.00) from holding Lupatech SA or give up 6.06% of portfolio value over 90 days.

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

Rumo SA  vs.  Lupatech SA

Rumo SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Rumo SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Lupatech SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lupatech SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Lupatech is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Rumo SA and Lupatech

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

The idea behind Rumo SA and Lupatech 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..