Correlation Between Recrusul and C1MI34

Can any of the company-specific risk be diversified away by investing in both Recrusul and C1MI34 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 C1MI34 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Recrusul SA and C1MI34, you can compare the effects of market volatilities on Recrusul and C1MI34 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 C1MI34. Check out your portfolio center. Please also check ongoing floating volatility patterns of Recrusul and C1MI34.

Diversification Opportunities for Recrusul and C1MI34

0.17

Correlation Coefficient

Recrusul  C1MI34

Average diversification

The 3 months correlation between Recrusul and C1MI34 is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Recrusul SA and C1MI34 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on C1MI34 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 C1MI34. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of C1MI34 has no effect on the direction of Recrusul i.e., Recrusul and C1MI34 go up and down completely randomly.

Pair Corralation between Recrusul and C1MI34

Assuming the 90 days trading horizon Recrusul is expected to generate 2.74 times less return on investment than C1MI34. In addition to that, Recrusul is 1.63 times more volatile than C1MI34. It trades about 0.03 of its total potential returns per unit of risk. C1MI34 is currently generating about 0.14 per unit of volatility. If you would invest  43,548  in C1MI34 on September 25, 2024 and sell it today you would earn a total of  11,802  from holding C1MI34 or generate 27.1% return on investment over 90 days.

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

Recrusul SA  vs.  C1MI34

Recrusul SA

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Recrusul SA are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Recrusul may actually be approaching a critical reversion point that can send shares even higher in January 2025.

C1MI34

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in C1MI34 are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak primary indicators, C1MI34 sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Recrusul and C1MI34

The main advantage of trading using opposite Recrusul and C1MI34 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Recrusul position performs unexpectedly, C1MI34 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 C1MI34 will offset losses from the drop in C1MI34's long position.

The idea behind Recrusul SA and C1MI34 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.