Correlation Between Romana Food and Neo Concept

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

By analyzing existing cross correlation between Romana Food Brands and Neo Concept International Group, you can compare the effects of market volatilities on Romana Food and Neo Concept 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 Romana Food with a short position of Neo Concept. Check out your portfolio center. Please also check ongoing floating volatility patterns of Romana Food and Neo Concept.

Diversification Opportunities for Romana Food and Neo Concept

0.0

Correlation Coefficient

Romana Food  Neo Concept

Pay attention - limited upside

The 3 months correlation between Romana and Neo is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Romana Food Brands and Neo Concept International Grou in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neo Concept Internat and Romana Food 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 Romana Food Brands are associated (or correlated) with Neo Concept. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Neo Concept Internat has no effect on the direction of Romana Food i.e., Romana Food and Neo Concept go up and down completely randomly.

Pair Corralation between Romana Food and Neo Concept

If you would invest  0.01  in Romana Food Brands on December 19, 2024 and sell it today you would earn a total of  0.00  from holding Romana Food Brands or generate 0.0% return on investment over 90 days.

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

Romana Food Brands  vs.  Neo Concept International Grou

Romana Food Brands

Risk-Adjusted Performance

Very Weak

Over the last 90 days Romana Food Brands has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental drivers, Romana Food is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Neo Concept Internat

Risk-Adjusted Performance

Very Weak

Over the last 90 days Neo Concept International Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's fundamental indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with Romana Food and Neo Concept

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

The idea behind Romana Food Brands and Neo Concept International Group 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.