Correlation Between Rubis SCA and NSE SA

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

Diversification Opportunities for Rubis SCA and NSE SA

0.55

Correlation Coefficient

Rubis SCA  NSE SA

Very weak diversification

The 3 months correlation between Rubis and NSE is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Rubis SCA and NSE SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NSE 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 NSE SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NSE SA has no effect on the direction of Rubis SCA i.e., Rubis SCA and NSE SA go up and down completely randomly.

Pair Corralation between Rubis SCA and NSE SA

Assuming the 90 days trading horizon Rubis SCA is expected to generate 3.84 times less return on investment than NSE SA. But when comparing it to its historical volatility, Rubis SCA is 2.14 times less risky than NSE SA. It trades about 0.12 of its potential returns per unit of risk. NSE SA is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  2,890  in NSE SA on December 28, 2024 and sell it today you would earn a total of  1,820  from holding NSE SA or generate 62.98% return on investment over 90 days.

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

Rubis SCA  vs.  NSE SA

Rubis SCA

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Rubis SCA are ranked lower than 9 (%) 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.

NSE SA

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in NSE SA are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, NSE SA reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Rubis SCA and NSE SA

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

The idea behind Rubis SCA and NSE 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.