Correlation Between Recrusul and Taurus Armas

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

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

Diversification Opportunities for Recrusul and Taurus Armas

-0.43

Correlation Coefficient

Recrusul  Taurus Armas

Very good diversification

The 3 months correlation between Recrusul and Taurus is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Recrusul SA and Taurus Armas SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taurus Armas SA 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 Taurus Armas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taurus Armas SA has no effect on the direction of Recrusul i.e., Recrusul and Taurus Armas go up and down completely randomly.

Pair Corralation between Recrusul and Taurus Armas

Assuming the 90 days trading horizon Recrusul SA is expected to under-perform the Taurus Armas. In addition to that, Recrusul is 3.36 times more volatile than Taurus Armas SA. It trades about -0.07 of its total potential returns per unit of risk. Taurus Armas SA is currently generating about -0.13 per unit of volatility. If you would invest  990.00  in Taurus Armas SA on September 27, 2024 and sell it today you would lose (114.00) from holding Taurus Armas SA or give up 11.52% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	97.56%
Values	Daily Returns

Recrusul SA  vs.  Taurus Armas SA

Recrusul SA

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Recrusul SA are ranked lower than 7 (%) 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.

Taurus Armas SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Taurus Armas SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Recrusul and Taurus Armas

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

The idea behind Recrusul SA and Taurus Armas SA 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.