Correlation Between Foreign Trade and Riverway Management

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

By analyzing existing cross correlation between Foreign Trade Development and Riverway Management JSC, you can compare the effects of market volatilities on Foreign Trade and Riverway Management 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 Foreign Trade with a short position of Riverway Management. Check out your portfolio center. Please also check ongoing floating volatility patterns of Foreign Trade and Riverway Management.

Diversification Opportunities for Foreign Trade and Riverway Management

-0.71

Correlation Coefficient

Foreign Trade  Riverway Management

Pay attention - limited upside

The 3 months correlation between Foreign and Riverway is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Foreign Trade Development and Riverway Management JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Riverway Management JSC and Foreign Trade 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 Foreign Trade Development are associated (or correlated) with Riverway Management. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Riverway Management JSC has no effect on the direction of Foreign Trade i.e., Foreign Trade and Riverway Management go up and down completely randomly.

Pair Corralation between Foreign Trade and Riverway Management

Assuming the 90 days trading horizon Foreign Trade Development is expected to generate 1.67 times more return on investment than Riverway Management. However, Foreign Trade is 1.67 times more volatile than Riverway Management JSC. It trades about 0.17 of its potential returns per unit of risk. Riverway Management JSC is currently generating about 0.1 per unit of risk. If you would invest  1,490,000  in Foreign Trade Development on September 29, 2024 and sell it today you would earn a total of  190,000  from holding Foreign Trade Development or generate 12.75% return on investment over 90 days.

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

Foreign Trade Development  vs.  Riverway Management JSC

Foreign Trade Development

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Foreign Trade Development are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, Foreign Trade displayed solid returns over the last few months and may actually be approaching a breakup point.

Riverway Management JSC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Riverway Management JSC 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 January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Foreign Trade and Riverway Management

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

The idea behind Foreign Trade Development and Riverway Management JSC 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.