Correlation Between Reinet Investments and Trencor

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

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

Diversification Opportunities for Reinet Investments and Trencor

-0.73

Correlation Coefficient

Reinet Investments  Trencor

Pay attention - limited upside

The 3 months correlation between Reinet and Trencor is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Reinet Investments SCA and Trencor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trencor and Reinet Investments 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 Reinet Investments SCA are associated (or correlated) with Trencor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trencor has no effect on the direction of Reinet Investments i.e., Reinet Investments and Trencor go up and down completely randomly.

Pair Corralation between Reinet Investments and Trencor

Assuming the 90 days trading horizon Reinet Investments SCA is expected to under-perform the Trencor. In addition to that, Reinet Investments is 1.23 times more volatile than Trencor. It trades about -0.01 of its total potential returns per unit of risk. Trencor is currently generating about 0.07 per unit of volatility. If you would invest  74,400  in Trencor on October 25, 2024 and sell it today you would earn a total of  4,100  from holding Trencor or generate 5.51% return on investment over 90 days.

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

Reinet Investments SCA  vs.  Trencor

Reinet Investments SCA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Reinet Investments SCA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Reinet Investments is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Trencor

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Trencor are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Trencor is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Reinet Investments and Trencor

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

The idea behind Reinet Investments SCA and Trencor 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 Stocks Directory module to find actively traded stocks across global markets.