Correlation Between TRANSILVANIA LEASING and Compa Sibiu

Can any of the company-specific risk be diversified away by investing in both TRANSILVANIA LEASING and Compa Sibiu 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 TRANSILVANIA LEASING and Compa Sibiu into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between TRANSILVANIA LEASING SI and Compa Sibiu, you can compare the effects of market volatilities on TRANSILVANIA LEASING and Compa Sibiu 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 TRANSILVANIA LEASING with a short position of Compa Sibiu. Check out your portfolio center. Please also check ongoing floating volatility patterns of TRANSILVANIA LEASING and Compa Sibiu.

Diversification Opportunities for TRANSILVANIA LEASING and Compa Sibiu

-0.12

Correlation Coefficient

TRANSILVANIA LEASING  Compa Sibiu

Good diversification

The 3 months correlation between TRANSILVANIA and Compa is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding TRANSILVANIA LEASING SI and Compa Sibiu in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compa Sibiu and TRANSILVANIA LEASING 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 TRANSILVANIA LEASING SI are associated (or correlated) with Compa Sibiu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compa Sibiu has no effect on the direction of TRANSILVANIA LEASING i.e., TRANSILVANIA LEASING and Compa Sibiu go up and down completely randomly.

Pair Corralation between TRANSILVANIA LEASING and Compa Sibiu

Assuming the 90 days trading horizon TRANSILVANIA LEASING SI is expected to generate 1.49 times more return on investment than Compa Sibiu. However, TRANSILVANIA LEASING is 1.49 times more volatile than Compa Sibiu. It trades about 0.01 of its potential returns per unit of risk. Compa Sibiu is currently generating about -0.01 per unit of risk. If you would invest  8.75  in TRANSILVANIA LEASING SI on December 2, 2024 and sell it today you would lose (0.15) from holding TRANSILVANIA LEASING SI or give up 1.71% of portfolio value over 90 days.

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

TRANSILVANIA LEASING SI  vs.  Compa Sibiu

TRANSILVANIA LEASING

Risk-Adjusted Performance

Very Weak

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

Compa Sibiu

Risk-Adjusted Performance

Very Weak

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

Pair Trading with TRANSILVANIA LEASING and Compa Sibiu

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

The idea behind TRANSILVANIA LEASING SI and Compa Sibiu 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.