Correlation Between Rubis SCA and Herige SA

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

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

Diversification Opportunities for Rubis SCA and Herige SA

-0.41

Correlation Coefficient

Rubis SCA  Herige SA

Very good diversification

The 3 months correlation between Rubis and Herige is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Rubis SCA and Herige SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Herige SA and Rubis SCA 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 Rubis SCA are associated (or correlated) with Herige SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Herige SA has no effect on the direction of Rubis SCA i.e., Rubis SCA and Herige SA go up and down completely randomly.

Pair Corralation between Rubis SCA and Herige SA

Assuming the 90 days trading horizon Rubis SCA is expected to generate 0.8 times more return on investment than Herige SA. However, Rubis SCA is 1.25 times less risky than Herige SA. It trades about 0.03 of its potential returns per unit of risk. Herige SA is currently generating about -0.02 per unit of risk. If you would invest  2,126  in Rubis SCA on December 4, 2024 and sell it today you would earn a total of  524.00  from holding Rubis SCA or generate 24.65% return on investment over 90 days.

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

Rubis SCA  vs.  Herige SA

Rubis SCA

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Rubis SCA are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak forward indicators, Rubis SCA sustained solid returns over the last few months and may actually be approaching a breakup point.

Herige SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Herige SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Herige SA is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Rubis SCA and Herige SA

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

The idea behind Rubis SCA and Herige 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.