Correlation Between Germina Agribusiness and Santierul Naval

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

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

Diversification Opportunities for Germina Agribusiness and Santierul Naval

0.02

Correlation Coefficient

Germina Agribusiness  Santierul Naval

Significant diversification

The 3 months correlation between Germina and Santierul is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Germina Agribusiness SA 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 Germina Agribusiness 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 Germina Agribusiness SA 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 Germina Agribusiness i.e., Germina Agribusiness and Santierul Naval go up and down completely randomly.

Pair Corralation between Germina Agribusiness and Santierul Naval

Assuming the 90 days trading horizon Germina Agribusiness SA is expected to generate 2.44 times more return on investment than Santierul Naval. However, Germina Agribusiness is 2.44 times more volatile than Santierul Naval Orsova. It trades about 0.19 of its potential returns per unit of risk. Santierul Naval Orsova is currently generating about 0.01 per unit of risk. If you would invest  150.00  in Germina Agribusiness SA on October 7, 2024 and sell it today you would earn a total of  15.00  from holding Germina Agribusiness SA or generate 10.0% return on investment over 90 days.

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

Germina Agribusiness SA  vs.  Santierul Naval Orsova

Germina Agribusiness

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Germina Agribusiness SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Germina Agribusiness 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

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Santierul Naval Orsova are ranked lower than 4 (%) 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 February 2025.

Pair Trading with Germina Agribusiness and Santierul Naval

The main advantage of trading using opposite Germina Agribusiness and Santierul Naval positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Germina Agribusiness 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 Germina Agribusiness SA 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.