Correlation Between Semapa and REN Redes

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

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

Diversification Opportunities for Semapa and REN Redes

0.57

Correlation Coefficient

Semapa  REN Redes

Very weak diversification

The 3 months correlation between Semapa and REN is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Semapa and REN Redes in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on REN Redes and Semapa 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 Semapa are associated (or correlated) with REN Redes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of REN Redes has no effect on the direction of Semapa i.e., Semapa and REN Redes go up and down completely randomly.

Pair Corralation between Semapa and REN Redes

Assuming the 90 days trading horizon Semapa is expected to generate 1.67 times less return on investment than REN Redes. But when comparing it to its historical volatility, Semapa is 1.06 times less risky than REN Redes. It trades about 0.16 of its potential returns per unit of risk. REN Redes is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest  227.00  in REN Redes on December 28, 2024 and sell it today you would earn a total of  46.00  from holding REN Redes or generate 20.26% return on investment over 90 days.

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

Semapa  vs.  REN Redes

Semapa

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Semapa are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain primary indicators, Semapa may actually be approaching a critical reversion point that can send shares even higher in April 2025.

REN Redes

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in REN Redes are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, REN Redes unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Semapa and REN Redes

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

The idea behind Semapa and REN Redes 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.