Correlation Between XRP and Romcab SA

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

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

Diversification Opportunities for XRP and Romcab SA

-0.95

Correlation Coefficient

XRP  Romcab SA

Pay attention - limited upside

The 3 months correlation between XRP and Romcab is -0.95. Overlapping area represents the amount of risk that can be diversified away by holding XRP and Romcab SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Romcab SA and XRP 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 XRP are associated (or correlated) with Romcab SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Romcab SA has no effect on the direction of XRP i.e., XRP and Romcab SA go up and down completely randomly.

Pair Corralation between XRP and Romcab SA

Assuming the 90 days trading horizon XRP is expected to generate 5.79 times less return on investment than Romcab SA. In addition to that, XRP is 2.55 times more volatile than Romcab SA. It trades about 0.03 of its total potential returns per unit of risk. Romcab SA is currently generating about 0.4 per unit of volatility. If you would invest  1.86  in Romcab SA on October 10, 2024 and sell it today you would earn a total of  0.22  from holding Romcab SA or generate 11.83% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	68.18%
Values	Daily Returns

XRP  vs.  Romcab SA

XRP

Risk-Adjusted Performance

26 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in XRP are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, XRP exhibited solid returns over the last few months and may actually be approaching a breakup point.

Romcab SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Romcab SA 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 February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with XRP and Romcab SA

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

The idea behind XRP and Romcab 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.