Correlation Between Teraplast Bist and IM Vinaria

Can any of the company-specific risk be diversified away by investing in both Teraplast Bist and IM Vinaria 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 Teraplast Bist and IM Vinaria into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Teraplast Bist and IM Vinaria Purcari, you can compare the effects of market volatilities on Teraplast Bist and IM Vinaria 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 Teraplast Bist with a short position of IM Vinaria. Check out your portfolio center. Please also check ongoing floating volatility patterns of Teraplast Bist and IM Vinaria.

Diversification Opportunities for Teraplast Bist and IM Vinaria

0.7

Correlation Coefficient

Teraplast Bist  IM Vinaria

Poor diversification

The 3 months correlation between Teraplast and WINE is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Teraplast Bist and IM Vinaria Purcari in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IM Vinaria Purcari and Teraplast Bist 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 Teraplast Bist are associated (or correlated) with IM Vinaria. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IM Vinaria Purcari has no effect on the direction of Teraplast Bist i.e., Teraplast Bist and IM Vinaria go up and down completely randomly.

Pair Corralation between Teraplast Bist and IM Vinaria

Assuming the 90 days trading horizon Teraplast Bist is expected to under-perform the IM Vinaria. In addition to that, Teraplast Bist is 1.83 times more volatile than IM Vinaria Purcari. It trades about -0.1 of its total potential returns per unit of risk. IM Vinaria Purcari is currently generating about 0.01 per unit of volatility. If you would invest  1,472  in IM Vinaria Purcari on September 12, 2024 and sell it today you would earn a total of  0.00  from holding IM Vinaria Purcari or generate 0.0% return on investment over 90 days.

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

Teraplast Bist  vs.  IM Vinaria Purcari

Teraplast Bist

Risk-Adjusted Performance

0 of 100

Very Weak

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

IM Vinaria Purcari

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days IM Vinaria Purcari has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, IM Vinaria is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Teraplast Bist and IM Vinaria

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

The idea behind Teraplast Bist and IM Vinaria Purcari 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.