Correlation Between Baltic Sea and RomReal

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

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

Diversification Opportunities for Baltic Sea and RomReal

-0.26

Correlation Coefficient

Baltic Sea  RomReal

Very good diversification

The 3 months correlation between Baltic and RomReal is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Baltic Sea Properties and RomReal Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RomReal Limited and Baltic Sea 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 Baltic Sea Properties are associated (or correlated) with RomReal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RomReal Limited has no effect on the direction of Baltic Sea i.e., Baltic Sea and RomReal go up and down completely randomly.

Pair Corralation between Baltic Sea and RomReal

Assuming the 90 days trading horizon Baltic Sea Properties is expected to generate 0.53 times more return on investment than RomReal. However, Baltic Sea Properties is 1.88 times less risky than RomReal. It trades about 0.01 of its potential returns per unit of risk. RomReal Limited is currently generating about -0.03 per unit of risk. If you would invest  4,900  in Baltic Sea Properties on September 27, 2024 and sell it today you would earn a total of  0.00  from holding Baltic Sea Properties or generate 0.0% return on investment over 90 days.

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

Baltic Sea Properties  vs.  RomReal Limited

Baltic Sea Properties

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Baltic Sea Properties are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent essential indicators, Baltic Sea is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

RomReal Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days RomReal Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's primary indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Baltic Sea and RomReal

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

The idea behind Baltic Sea Properties and RomReal Limited 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.