Correlation Between Recrusul and Dollar General

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

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

Diversification Opportunities for Recrusul and Dollar General

0.89

Correlation Coefficient

Recrusul  Dollar General

Very poor diversification

The 3 months correlation between Recrusul and Dollar is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Recrusul SA and Dollar General in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dollar General 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 Dollar General. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dollar General has no effect on the direction of Recrusul i.e., Recrusul and Dollar General go up and down completely randomly.

Pair Corralation between Recrusul and Dollar General

Assuming the 90 days trading horizon Recrusul SA is expected to generate 2.55 times more return on investment than Dollar General. However, Recrusul is 2.55 times more volatile than Dollar General. It trades about 0.06 of its potential returns per unit of risk. Dollar General is currently generating about 0.05 per unit of risk. If you would invest  106.00  in Recrusul SA on December 30, 2024 and sell it today you would earn a total of  15.00  from holding Recrusul SA or generate 14.15% return on investment over 90 days.

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

Recrusul SA  vs.  Dollar General

Recrusul SA

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Recrusul SA are ranked lower than 4 (%) 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.

Dollar General

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Dollar General are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental indicators, Dollar General may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Recrusul and Dollar General

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

The idea behind Recrusul SA and Dollar General 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.