Correlation Between Societatea Nationala and TRANSILVANIA INVESTMENTS

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

Diversification Opportunities for Societatea Nationala and TRANSILVANIA INVESTMENTS

0.13

Correlation Coefficient

Societatea Nationala  TRANSILVANIA INVESTMENTS

Average diversification

The 3 months correlation between Societatea and TRANSILVANIA is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Societatea Nationala de and TRANSILVANIA INVESTMENTS ALLIA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TRANSILVANIA INVESTMENTS 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 TRANSILVANIA INVESTMENTS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TRANSILVANIA INVESTMENTS has no effect on the direction of Societatea Nationala i.e., Societatea Nationala and TRANSILVANIA INVESTMENTS go up and down completely randomly.

Pair Corralation between Societatea Nationala and TRANSILVANIA INVESTMENTS

Assuming the 90 days trading horizon Societatea Nationala de is expected to generate 0.68 times more return on investment than TRANSILVANIA INVESTMENTS. However, Societatea Nationala de is 1.48 times less risky than TRANSILVANIA INVESTMENTS. It trades about 0.22 of its potential returns per unit of risk. TRANSILVANIA INVESTMENTS ALLIANCE is currently generating about 0.01 per unit of risk. If you would invest  505.00  in Societatea Nationala de on December 2, 2024 and sell it today you would earn a total of  85.00  from holding Societatea Nationala de or generate 16.83% return on investment over 90 days.

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

Societatea Nationala de  vs.  TRANSILVANIA INVESTMENTS ALLIA

Societatea Nationala

Risk-Adjusted Performance

Solid

Over the last 90 days Societatea Nationala de has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very weak technical and fundamental indicators, Societatea Nationala displayed solid returns over the last few months and may actually be approaching a breakup point.

TRANSILVANIA INVESTMENTS

Risk-Adjusted Performance

Very Weak

Over the last 90 days TRANSILVANIA INVESTMENTS ALLIANCE has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, TRANSILVANIA INVESTMENTS is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Societatea Nationala and TRANSILVANIA INVESTMENTS

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

The idea behind Societatea Nationala de and TRANSILVANIA INVESTMENTS ALLIANCE 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.