Correlation Between ReTo Eco and Tecnoglass

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

By analyzing existing cross correlation between ReTo Eco Solutions and Tecnoglass, you can compare the effects of market volatilities on ReTo Eco and Tecnoglass 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 ReTo Eco with a short position of Tecnoglass. Check out your portfolio center. Please also check ongoing floating volatility patterns of ReTo Eco and Tecnoglass.

Diversification Opportunities for ReTo Eco and Tecnoglass

-0.68

Correlation Coefficient

ReTo Eco  Tecnoglass

Excellent diversification

The 3 months correlation between ReTo and Tecnoglass is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding ReTo Eco Solutions and Tecnoglass in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tecnoglass and ReTo Eco 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 ReTo Eco Solutions are associated (or correlated) with Tecnoglass. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tecnoglass has no effect on the direction of ReTo Eco i.e., ReTo Eco and Tecnoglass go up and down completely randomly.

Pair Corralation between ReTo Eco and Tecnoglass

Given the investment horizon of 90 days ReTo Eco Solutions is expected to generate 14.36 times more return on investment than Tecnoglass. However, ReTo Eco is 14.36 times more volatile than Tecnoglass. It trades about 0.03 of its potential returns per unit of risk. Tecnoglass is currently generating about 0.08 per unit of risk. If you would invest  4,100  in ReTo Eco Solutions on September 20, 2024 and sell it today you would lose (4,006) from holding ReTo Eco Solutions or give up 97.71% of portfolio value over 90 days.

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

ReTo Eco Solutions  vs.  Tecnoglass

ReTo Eco Solutions

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ReTo Eco Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Tecnoglass

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Tecnoglass are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak essential indicators, Tecnoglass unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ReTo Eco and Tecnoglass

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

The idea behind ReTo Eco Solutions and Tecnoglass 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.