Correlation Between Damartex and Riber SA

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

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

Diversification Opportunities for Damartex and Riber SA

-0.11

Correlation Coefficient

Damartex  Riber SA

Good diversification

The 3 months correlation between Damartex and Riber is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Damartex and Riber SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Riber SA and Damartex 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 Damartex are associated (or correlated) with Riber SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Riber SA has no effect on the direction of Damartex i.e., Damartex and Riber SA go up and down completely randomly.

Pair Corralation between Damartex and Riber SA

Assuming the 90 days trading horizon Damartex is expected to generate 1.67 times less return on investment than Riber SA. In addition to that, Damartex is 1.11 times more volatile than Riber SA. It trades about 0.04 of its total potential returns per unit of risk. Riber SA is currently generating about 0.08 per unit of volatility. If you would invest  179.00  in Riber SA on September 24, 2024 and sell it today you would earn a total of  94.00  from holding Riber SA or generate 52.51% return on investment over 90 days.

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

Damartex  vs.  Riber SA

Damartex

Risk-Adjusted Performance

3 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Damartex are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Damartex may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Riber SA

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Riber SA are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Riber SA may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Damartex and Riber SA

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

The idea behind Damartex and Riber 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.