Correlation Between Societatea Nationala and Promateris

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

Diversification Opportunities for Societatea Nationala and Promateris

-0.75

Correlation Coefficient

Societatea Nationala  Promateris

Pay attention - limited upside

The 3 months correlation between Societatea and Promateris is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Societatea Nationala de and Promateris SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Promateris 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 Promateris. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Promateris SA has no effect on the direction of Societatea Nationala i.e., Societatea Nationala and Promateris go up and down completely randomly.

Pair Corralation between Societatea Nationala and Promateris

Assuming the 90 days trading horizon Societatea Nationala de is expected to generate 0.34 times more return on investment than Promateris. However, Societatea Nationala de is 2.97 times less risky than Promateris. It trades about 0.19 of its potential returns per unit of risk. Promateris SA is currently generating about -0.09 per unit of risk. If you would invest  531.00  in Societatea Nationala de on December 25, 2024 and sell it today you would earn a total of  66.00  from holding Societatea Nationala de or generate 12.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.25%
Values	Daily Returns

Societatea Nationala de  vs.  Promateris 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 15 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical and fundamental indicators, Societatea Nationala displayed solid returns over the last few months and may actually be approaching a breakup point.

Promateris SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Promateris SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's essential indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Societatea Nationala and Promateris

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

The idea behind Societatea Nationala de and Promateris 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.

Check out your portfolio center.

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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.