Correlation Between Indstrias Romi and Technos SA

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

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

Diversification Opportunities for Indstrias Romi and Technos SA

0.5

Correlation Coefficient

Indstrias Romi  Technos SA

Very weak diversification

The 3 months correlation between Indstrias and Technos is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Indstrias Romi SA and Technos SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Technos SA and Indstrias Romi 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 Indstrias Romi SA are associated (or correlated) with Technos SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Technos SA has no effect on the direction of Indstrias Romi i.e., Indstrias Romi and Technos SA go up and down completely randomly.

Pair Corralation between Indstrias Romi and Technos SA

Assuming the 90 days trading horizon Indstrias Romi is expected to generate 2.54 times less return on investment than Technos SA. But when comparing it to its historical volatility, Indstrias Romi SA is 1.54 times less risky than Technos SA. It trades about 0.03 of its potential returns per unit of risk. Technos SA is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  531.00  in Technos SA on December 6, 2024 and sell it today you would earn a total of  9.00  from holding Technos SA or generate 1.69% return on investment over 90 days.

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

Indstrias Romi SA  vs.  Technos SA

Indstrias Romi SA

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Indstrias Romi SA are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Indstrias Romi may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Technos SA

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Technos SA are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Technos SA is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Indstrias Romi and Technos SA

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

The idea behind Indstrias Romi SA and Technos SA 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.