Correlation Between ROHM and RenaissanceRe Holdings

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

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

Diversification Opportunities for ROHM and RenaissanceRe Holdings

-0.19

Correlation Coefficient

ROHM  RenaissanceRe Holdings

Good diversification

The 3 months correlation between ROHM and RenaissanceRe is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding ROHM Co and RenaissanceRe Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RenaissanceRe Holdings and ROHM 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 ROHM Co are associated (or correlated) with RenaissanceRe Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RenaissanceRe Holdings has no effect on the direction of ROHM i.e., ROHM and RenaissanceRe Holdings go up and down completely randomly.

Pair Corralation between ROHM and RenaissanceRe Holdings

Assuming the 90 days horizon ROHM Co is expected to generate 1.21 times more return on investment than RenaissanceRe Holdings. However, ROHM is 1.21 times more volatile than RenaissanceRe Holdings. It trades about -0.01 of its potential returns per unit of risk. RenaissanceRe Holdings is currently generating about -0.1 per unit of risk. If you would invest  896.00  in ROHM Co on October 12, 2024 and sell it today you would lose (7.00) from holding ROHM Co or give up 0.78% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	94.44%
Values	Daily Returns

ROHM Co  vs.  RenaissanceRe Holdings

ROHM

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ROHM Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

RenaissanceRe Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days RenaissanceRe Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, RenaissanceRe Holdings is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with ROHM and RenaissanceRe Holdings

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

The idea behind ROHM Co and RenaissanceRe Holdings 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 CEOs Directory module to screen CEOs from public companies around the world.