Correlation Between Indstrias Romi and Whirlpool

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

Diversification Opportunities for Indstrias Romi and Whirlpool

0.39

Correlation Coefficient

Indstrias Romi  Whirlpool

Weak diversification

The 3 months correlation between Indstrias and Whirlpool is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Indstrias Romi SA and Whirlpool SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Whirlpool 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 Whirlpool. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Whirlpool SA has no effect on the direction of Indstrias Romi i.e., Indstrias Romi and Whirlpool go up and down completely randomly.

Pair Corralation between Indstrias Romi and Whirlpool

Assuming the 90 days trading horizon Indstrias Romi SA is expected to under-perform the Whirlpool. But the stock apears to be less risky and, when comparing its historical volatility, Indstrias Romi SA is 1.21 times less risky than Whirlpool. The stock trades about -0.18 of its potential returns per unit of risk. The Whirlpool SA is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  451.00  in Whirlpool SA on September 14, 2024 and sell it today you would lose (15.00) from holding Whirlpool SA or give up 3.33% of portfolio value over 90 days.

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

Indstrias Romi SA  vs.  Whirlpool SA

Indstrias Romi SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Indstrias Romi SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Whirlpool SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Whirlpool SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Whirlpool is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Indstrias Romi and Whirlpool

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

The idea behind Indstrias Romi SA and Whirlpool 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 Global Correlations module to find global opportunities by holding instruments from different markets.