Correlation Between Vasta Platform and Ramaco Resources

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

By analyzing existing cross correlation between Vasta Platform and Ramaco Resources, you can compare the effects of market volatilities on Vasta Platform and Ramaco Resources 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 Vasta Platform with a short position of Ramaco Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vasta Platform and Ramaco Resources.

Diversification Opportunities for Vasta Platform and Ramaco Resources

0.27

Correlation Coefficient

Vasta Platform  Ramaco Resources

Modest diversification

The 3 months correlation between Vasta and Ramaco is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Vasta Platform and Ramaco Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ramaco Resources and Vasta Platform 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 Vasta Platform are associated (or correlated) with Ramaco Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ramaco Resources has no effect on the direction of Vasta Platform i.e., Vasta Platform and Ramaco Resources go up and down completely randomly.

Pair Corralation between Vasta Platform and Ramaco Resources

Given the investment horizon of 90 days Vasta Platform is expected to generate 1.99 times more return on investment than Ramaco Resources. However, Vasta Platform is 1.99 times more volatile than Ramaco Resources. It trades about 0.06 of its potential returns per unit of risk. Ramaco Resources is currently generating about -0.18 per unit of risk. If you would invest  221.00  in Vasta Platform on October 11, 2024 and sell it today you would earn a total of  9.00  from holding Vasta Platform or generate 4.07% return on investment over 90 days.

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

Vasta Platform  vs.  Ramaco Resources

Vasta Platform

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vasta Platform has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Ramaco Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ramaco Resources has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Vasta Platform and Ramaco Resources

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

The idea behind Vasta Platform and Ramaco Resources 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.