Correlation Between Societatea Nationala and Romcab SA

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

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

Diversification Opportunities for Societatea Nationala and Romcab SA

-0.25

Correlation Coefficient

Societatea Nationala  Romcab SA

Very good diversification

The 3 months correlation between Societatea and Romcab is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Societatea Nationala de and Romcab SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Romcab SA and Societatea Nationala 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 Societatea Nationala de are associated (or correlated) with Romcab SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Romcab SA has no effect on the direction of Societatea Nationala i.e., Societatea Nationala and Romcab SA go up and down completely randomly.

Pair Corralation between Societatea Nationala and Romcab SA

Assuming the 90 days trading horizon Societatea Nationala is expected to generate 8.2 times less return on investment than Romcab SA. But when comparing it to its historical volatility, Societatea Nationala de is 9.87 times less risky than Romcab SA. It trades about 0.18 of its potential returns per unit of risk. Romcab SA is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  2.08  in Romcab SA on December 24, 2024 and sell it today you would earn a total of  1.62  from holding Romcab SA or generate 77.88% return on investment over 90 days.

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

Societatea Nationala de  vs.  Romcab SA

Societatea Nationala

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Societatea Nationala de are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical and fundamental indicators, Societatea Nationala may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Romcab SA

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Romcab SA are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Romcab SA displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Societatea Nationala and Romcab SA

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

The idea behind Societatea Nationala de and Romcab 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.