Correlation Between AMERICAN and Romana Food

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

By analyzing existing cross correlation between AMERICAN TOWER P and Romana Food Brands, you can compare the effects of market volatilities on AMERICAN and Romana Food 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 AMERICAN with a short position of Romana Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of AMERICAN and Romana Food.

Diversification Opportunities for AMERICAN and Romana Food

0.0

Correlation Coefficient

AMERICAN  Romana Food

Pay attention - limited upside

The 3 months correlation between AMERICAN and Romana is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding AMERICAN TOWER P and Romana Food Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Romana Food Brands and AMERICAN 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 AMERICAN TOWER P are associated (or correlated) with Romana Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Romana Food Brands has no effect on the direction of AMERICAN i.e., AMERICAN and Romana Food go up and down completely randomly.

Pair Corralation between AMERICAN and Romana Food

If you would invest  9,652  in AMERICAN TOWER P on December 23, 2024 and sell it today you would earn a total of  85.00  from holding AMERICAN TOWER P or generate 0.88% return on investment over 90 days.

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

AMERICAN TOWER P  vs.  Romana Food Brands

AMERICAN TOWER P

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in AMERICAN TOWER P are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, AMERICAN is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Romana Food Brands

Risk-Adjusted Performance

Very Weak

Over the last 90 days Romana Food Brands has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental drivers, Romana Food is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with AMERICAN and Romana Food

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

The idea behind AMERICAN TOWER P and Romana Food Brands 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.