Correlation Between Rompetrol Rafi and Santierul Naval

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

By analyzing existing cross correlation between Rompetrol Rafi and Santierul Naval Orsova, you can compare the effects of market volatilities on Rompetrol Rafi and Santierul Naval 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 Santierul Naval. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rompetrol Rafi and Santierul Naval.

Diversification Opportunities for Rompetrol Rafi and Santierul Naval

-0.52

Correlation Coefficient

Rompetrol Rafi  Santierul Naval

Excellent diversification

The 3 months correlation between Rompetrol and Santierul is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Rompetrol Rafi and Santierul Naval Orsova in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Santierul Naval Orsova 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 Santierul Naval. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Santierul Naval Orsova has no effect on the direction of Rompetrol Rafi i.e., Rompetrol Rafi and Santierul Naval go up and down completely randomly.

Pair Corralation between Rompetrol Rafi and Santierul Naval

Assuming the 90 days trading horizon Rompetrol Rafi is expected to under-perform the Santierul Naval. In addition to that, Rompetrol Rafi is 1.14 times more volatile than Santierul Naval Orsova. It trades about -0.05 of its total potential returns per unit of risk. Santierul Naval Orsova is currently generating about 0.07 per unit of volatility. If you would invest  605.00  in Santierul Naval Orsova on September 27, 2024 and sell it today you would earn a total of  110.00  from holding Santierul Naval Orsova or generate 18.18% return on investment over 90 days.

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

Rompetrol Rafi  vs.  Santierul Naval Orsova

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.

Santierul Naval Orsova

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Santierul Naval Orsova are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Santierul Naval may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Rompetrol Rafi and Santierul Naval

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

The idea behind Rompetrol Rafi and Santierul Naval Orsova 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.