Correlation Between Recrusul and Otis Worldwide

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

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

Diversification Opportunities for Recrusul and Otis Worldwide

0.45

Correlation Coefficient

Recrusul  Otis Worldwide

Very weak diversification

The 3 months correlation between Recrusul and Otis is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Recrusul SA and Otis Worldwide in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Otis Worldwide 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 Otis Worldwide. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Otis Worldwide has no effect on the direction of Recrusul i.e., Recrusul and Otis Worldwide go up and down completely randomly.

Pair Corralation between Recrusul and Otis Worldwide

Assuming the 90 days trading horizon Recrusul SA is expected to under-perform the Otis Worldwide. In addition to that, Recrusul is 5.03 times more volatile than Otis Worldwide. It trades about -0.1 of its total potential returns per unit of risk. Otis Worldwide is currently generating about -0.1 per unit of volatility. If you would invest  6,127  in Otis Worldwide on December 2, 2024 and sell it today you would lose (430.00) from holding Otis Worldwide or give up 7.02% of portfolio value over 90 days.

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

Recrusul SA  vs.  Otis Worldwide

Recrusul SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Recrusul SA 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 Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Otis Worldwide

Risk-Adjusted Performance

Very Weak

Over the last 90 days Otis Worldwide has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Recrusul and Otis Worldwide

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

The idea behind Recrusul SA and Otis Worldwide 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.