Correlation Between Bardella and Recrusul

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

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

Diversification Opportunities for Bardella and Recrusul

0.04

Correlation Coefficient

Bardella  Recrusul

Significant diversification

The 3 months correlation between Bardella and Recrusul is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Bardella SA Indstrias and Recrusul SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Recrusul SA and Bardella 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 Bardella SA Indstrias are associated (or correlated) with Recrusul. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Recrusul SA has no effect on the direction of Bardella i.e., Bardella and Recrusul go up and down completely randomly.

Pair Corralation between Bardella and Recrusul

Assuming the 90 days trading horizon Bardella SA Indstrias is expected to under-perform the Recrusul. But the preferred stock apears to be less risky and, when comparing its historical volatility, Bardella SA Indstrias is 3.04 times less risky than Recrusul. The preferred stock trades about -0.01 of its potential returns per unit of risk. The Recrusul SA is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  98.00  in Recrusul SA on September 23, 2024 and sell it today you would earn a total of  30.00  from holding Recrusul SA or generate 30.61% return on investment over 90 days.

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

Bardella SA Indstrias  vs.  Recrusul SA

Bardella SA Indstrias

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bardella SA Indstrias has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Bardella is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Recrusul SA

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Recrusul SA are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Recrusul unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bardella and Recrusul

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

The idea behind Bardella SA Indstrias and Recrusul 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 Transaction History module to view history of all your transactions and understand their impact on performance.