Correlation Between Recrusul and Aeris Indstria

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

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

Diversification Opportunities for Recrusul and Aeris Indstria

0.55

Correlation Coefficient

Recrusul  Aeris Indstria

Very weak diversification

The 3 months correlation between Recrusul and Aeris is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Recrusul SA and Aeris Indstria e in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aeris Indstria e and Recrusul 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 Recrusul SA are associated (or correlated) with Aeris Indstria. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aeris Indstria e has no effect on the direction of Recrusul i.e., Recrusul and Aeris Indstria go up and down completely randomly.

Pair Corralation between Recrusul and Aeris Indstria

Assuming the 90 days trading horizon Recrusul is expected to generate 13.84 times less return on investment than Aeris Indstria. But when comparing it to its historical volatility, Recrusul SA is 5.16 times less risky than Aeris Indstria. It trades about 0.03 of its potential returns per unit of risk. Aeris Indstria e is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  2,900  in Aeris Indstria e on October 13, 2024 and sell it today you would lose (2,157) from holding Aeris Indstria e or give up 74.38% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.8%
Values	Daily Returns

Recrusul SA  vs.  Aeris Indstria e

Recrusul SA

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Recrusul SA are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Recrusul unveiled solid returns over the last few months and may actually be approaching a breakup point.

Aeris Indstria e

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Aeris Indstria e are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Aeris Indstria unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Recrusul and Aeris Indstria

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

The idea behind Recrusul SA and Aeris Indstria e 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.