Correlation Between Recrusul and General Electric

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

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

Diversification Opportunities for Recrusul and General Electric

-0.01

Correlation Coefficient

Recrusul  General Electric

Good diversification

The 3 months correlation between Recrusul and General is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Recrusul SA and General Electric in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on General Electric 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 General Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of General Electric has no effect on the direction of Recrusul i.e., Recrusul and General Electric go up and down completely randomly.

Pair Corralation between Recrusul and General Electric

Assuming the 90 days trading horizon Recrusul SA is expected to generate 2.39 times more return on investment than General Electric. However, Recrusul is 2.39 times more volatile than General Electric. It trades about 0.04 of its potential returns per unit of risk. General Electric is currently generating about -0.01 per unit of risk. If you would invest  457.00  in Recrusul SA on October 13, 2024 and sell it today you would earn a total of  25.00  from holding Recrusul SA or generate 5.47% return on investment over 90 days.

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

Recrusul SA  vs.  General Electric

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.

General Electric

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days General Electric has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, General Electric is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Recrusul and General Electric

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

The idea behind Recrusul SA and General Electric 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.