Correlation Between TRANSILVANIA LEASING and Germina Agribusiness

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

Diversification Opportunities for TRANSILVANIA LEASING and Germina Agribusiness

0.18

Correlation Coefficient

TRANSILVANIA LEASING  Germina Agribusiness

Average diversification

The 3 months correlation between TRANSILVANIA and Germina is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding TRANSILVANIA LEASING SI and Germina Agribusiness SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Germina Agribusiness 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 Germina Agribusiness. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Germina Agribusiness has no effect on the direction of TRANSILVANIA LEASING i.e., TRANSILVANIA LEASING and Germina Agribusiness go up and down completely randomly.

Pair Corralation between TRANSILVANIA LEASING and Germina Agribusiness

Assuming the 90 days trading horizon TRANSILVANIA LEASING SI is expected to generate 0.92 times more return on investment than Germina Agribusiness. However, TRANSILVANIA LEASING SI is 1.09 times less risky than Germina Agribusiness. It trades about 0.11 of its potential returns per unit of risk. Germina Agribusiness SA is currently generating about 0.0 per unit of risk. If you would invest  8.55  in TRANSILVANIA LEASING SI on December 26, 2024 and sell it today you would earn a total of  1.45  from holding TRANSILVANIA LEASING SI or generate 16.96% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.28%
Values	Daily Returns

TRANSILVANIA LEASING SI  vs.  Germina Agribusiness SA

TRANSILVANIA LEASING

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in TRANSILVANIA LEASING SI are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, TRANSILVANIA LEASING displayed solid returns over the last few months and may actually be approaching a breakup point.

Germina Agribusiness

Risk-Adjusted Performance

Weak

Over the last 90 days Germina Agribusiness SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Germina Agribusiness 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 Germina Agribusiness

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

The idea behind TRANSILVANIA LEASING SI and Germina Agribusiness 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.

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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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.