Correlation Between Rompetrol Rafi and BONAS IMPORT

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

By analyzing existing cross correlation between Rompetrol Rafi and BONAS IMPORT EXPORT, you can compare the effects of market volatilities on Rompetrol Rafi and BONAS IMPORT 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 Rompetrol Rafi with a short position of BONAS IMPORT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rompetrol Rafi and BONAS IMPORT.

Diversification Opportunities for Rompetrol Rafi and BONAS IMPORT

0.71

Correlation Coefficient

Rompetrol Rafi  BONAS IMPORT

Poor diversification

The 3 months correlation between Rompetrol and BONAS is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Rompetrol Rafi and BONAS IMPORT EXPORT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BONAS IMPORT EXPORT and Rompetrol Rafi 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 Rompetrol Rafi are associated (or correlated) with BONAS IMPORT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BONAS IMPORT EXPORT has no effect on the direction of Rompetrol Rafi i.e., Rompetrol Rafi and BONAS IMPORT go up and down completely randomly.

Pair Corralation between Rompetrol Rafi and BONAS IMPORT

Assuming the 90 days trading horizon Rompetrol Rafi is expected to generate 0.71 times more return on investment than BONAS IMPORT. However, Rompetrol Rafi is 1.41 times less risky than BONAS IMPORT. It trades about -0.05 of its potential returns per unit of risk. BONAS IMPORT EXPORT is currently generating about -0.11 per unit of risk. If you would invest  8.40  in Rompetrol Rafi on September 27, 2024 and sell it today you would lose (1.65) from holding Rompetrol Rafi or give up 19.64% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	68.25%
Values	Daily Returns

Rompetrol Rafi  vs.  BONAS IMPORT EXPORT

Rompetrol Rafi

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rompetrol Rafi has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, Rompetrol Rafi is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

BONAS IMPORT EXPORT

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BONAS IMPORT EXPORT has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Rompetrol Rafi and BONAS IMPORT

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

The idea behind Rompetrol Rafi and BONAS IMPORT EXPORT 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.