Correlation Between Randon SA and So Martinho

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

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

Diversification Opportunities for Randon SA and So Martinho

0.41

Correlation Coefficient

Randon SA  So Martinho

Very weak diversification

The 3 months correlation between Randon and SMTO3 is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Randon SA Implementos and So Martinho SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on So Martinho SA and Randon 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 Randon SA Implementos are associated (or correlated) with So Martinho. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of So Martinho SA has no effect on the direction of Randon SA i.e., Randon SA and So Martinho go up and down completely randomly.

Pair Corralation between Randon SA and So Martinho

Assuming the 90 days trading horizon Randon SA Implementos is expected to under-perform the So Martinho. In addition to that, Randon SA is 1.08 times more volatile than So Martinho SA. It trades about -0.07 of its total potential returns per unit of risk. So Martinho SA is currently generating about -0.01 per unit of volatility. If you would invest  2,692  in So Martinho SA on October 12, 2024 and sell it today you would lose (228.00) from holding So Martinho SA or give up 8.47% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.47%
Values	Daily Returns

Randon SA Implementos  vs.  So Martinho SA

Randon SA Implementos

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Randon SA Implementos has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Preferred Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

So Martinho SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days So Martinho SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, So Martinho 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 Randon SA and So Martinho

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

The idea behind Randon SA Implementos and So Martinho 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.