Correlation Between Rimo International and Natura City

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

By analyzing existing cross correlation between Rimo International Lestari and Natura City Developments, you can compare the effects of market volatilities on Rimo International and Natura City 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 Rimo International with a short position of Natura City. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rimo International and Natura City.

Diversification Opportunities for Rimo International and Natura City

0.0

Correlation Coefficient

Rimo International  Natura City

Pay attention - limited upside

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

Pair Corralation between Rimo International and Natura City

If you would invest  12,000  in Natura City Developments on October 25, 2024 and sell it today you would lose (1,400) from holding Natura City Developments or give up 11.67% of portfolio value over 90 days.

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

Rimo International Lestari  vs.  Natura City Developments

Rimo International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rimo International Lestari has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Rimo International is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Natura City Developments

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Natura City Developments are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Natura City may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Rimo International and Natura City

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

The idea behind Rimo International Lestari and Natura City Developments 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.