Correlation Between Trematon Capital and Brait SE

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

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

Diversification Opportunities for Trematon Capital and Brait SE

-0.42

Correlation Coefficient

Trematon Capital  Brait SE

Very good diversification

The 3 months correlation between Trematon and Brait is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Trematon Capital Investments and Brait SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brait SE and Trematon Capital 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 Trematon Capital Investments are associated (or correlated) with Brait SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brait SE has no effect on the direction of Trematon Capital i.e., Trematon Capital and Brait SE go up and down completely randomly.

Pair Corralation between Trematon Capital and Brait SE

Assuming the 90 days trading horizon Trematon Capital Investments is expected to generate 2.61 times more return on investment than Brait SE. However, Trematon Capital is 2.61 times more volatile than Brait SE. It trades about 0.14 of its potential returns per unit of risk. Brait SE is currently generating about -0.1 per unit of risk. If you would invest  22,000  in Trematon Capital Investments on September 29, 2024 and sell it today you would earn a total of  2,800  from holding Trematon Capital Investments or generate 12.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.0%
Values	Daily Returns

Trematon Capital Investments  vs.  Brait SE

Trematon Capital Inv

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Trematon Capital Investments are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Trematon Capital may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Brait SE

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Brait SE are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Brait SE exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Trematon Capital and Brait SE

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

The idea behind Trematon Capital Investments and Brait SE 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.