Correlation Between Inepar SA and Refinaria

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

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

Diversification Opportunities for Inepar SA and Refinaria

0.86

Correlation Coefficient

Inepar SA  Refinaria

Very poor diversification

The 3 months correlation between Inepar and Refinaria is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Inepar SA Indstria and Refinaria de Petrleos in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Refinaria de Petrleos and Inepar SA 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 Inepar SA Indstria are associated (or correlated) with Refinaria. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Refinaria de Petrleos has no effect on the direction of Inepar SA i.e., Inepar SA and Refinaria go up and down completely randomly.

Pair Corralation between Inepar SA and Refinaria

Assuming the 90 days trading horizon Inepar SA Indstria is expected to under-perform the Refinaria. In addition to that, Inepar SA is 1.17 times more volatile than Refinaria de Petrleos. It trades about -0.08 of its total potential returns per unit of risk. Refinaria de Petrleos is currently generating about -0.02 per unit of volatility. If you would invest  289.00  in Refinaria de Petrleos on September 12, 2024 and sell it today you would lose (17.00) from holding Refinaria de Petrleos or give up 5.88% of portfolio value over 90 days.

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

Inepar SA Indstria  vs.  Refinaria de Petrleos

Inepar SA Indstria

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Inepar SA Indstria has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Preferred Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Refinaria de Petrleos

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Inepar SA and Refinaria

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

The idea behind Inepar SA Indstria and Refinaria de Petrleos 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.