Correlation Between REINET INVESTMENTS and UMWELTBANK

Can any of the company-specific risk be diversified away by investing in both REINET INVESTMENTS and UMWELTBANK 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 UMWELTBANK 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 UMWELTBANK, you can compare the effects of market volatilities on REINET INVESTMENTS and UMWELTBANK 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 UMWELTBANK. Check out your portfolio center. Please also check ongoing floating volatility patterns of REINET INVESTMENTS and UMWELTBANK.

Diversification Opportunities for REINET INVESTMENTS and UMWELTBANK

0.36

Correlation Coefficient

REINET INVESTMENTS  UMWELTBANK

Weak diversification

The 3 months correlation between REINET and UMWELTBANK is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding REINET INVESTMENTS SCA and UMWELTBANK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UMWELTBANK 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 UMWELTBANK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UMWELTBANK has no effect on the direction of REINET INVESTMENTS i.e., REINET INVESTMENTS and UMWELTBANK go up and down completely randomly.

Pair Corralation between REINET INVESTMENTS and UMWELTBANK

Assuming the 90 days horizon REINET INVESTMENTS SCA is expected to generate 1.11 times more return on investment than UMWELTBANK. However, REINET INVESTMENTS is 1.11 times more volatile than UMWELTBANK. It trades about 0.04 of its potential returns per unit of risk. UMWELTBANK is currently generating about -0.03 per unit of risk. If you would invest  1,912  in REINET INVESTMENTS SCA on October 5, 2024 and sell it today you would earn a total of  548.00  from holding REINET INVESTMENTS SCA or generate 28.66% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.68%
Values	Daily Returns

REINET INVESTMENTS SCA  vs.  UMWELTBANK

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. Despite nearly stable basic indicators, REINET INVESTMENTS is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

UMWELTBANK

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in UMWELTBANK are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain forward-looking signals, UMWELTBANK exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with REINET INVESTMENTS and UMWELTBANK

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

The idea behind REINET INVESTMENTS SCA and UMWELTBANK 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.