Correlation Between Rompetrol Rafi and Unisem SA

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

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

Diversification Opportunities for Rompetrol Rafi and Unisem SA

0.08

Correlation Coefficient

Rompetrol Rafi  Unisem SA

Significant diversification

The 3 months correlation between Rompetrol and Unisem is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Rompetrol Rafi and Unisem SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unisem SA 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 Unisem SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Unisem SA has no effect on the direction of Rompetrol Rafi i.e., Rompetrol Rafi and Unisem SA go up and down completely randomly.

Pair Corralation between Rompetrol Rafi and Unisem SA

Assuming the 90 days trading horizon Rompetrol Rafi is expected to under-perform the Unisem SA. But the stock apears to be less risky and, when comparing its historical volatility, Rompetrol Rafi is 1.13 times less risky than Unisem SA. The stock trades about -0.01 of its potential returns per unit of risk. The Unisem SA is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  37.00  in Unisem SA on October 24, 2024 and sell it today you would earn a total of  0.00  from holding Unisem SA or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	96.49%
Values	Daily Returns

Rompetrol Rafi  vs.  Unisem SA

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.

Unisem SA

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Unisem SA are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong forward indicators, Unisem SA is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Rompetrol Rafi and Unisem SA

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

The idea behind Rompetrol Rafi and Unisem 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.