Correlation Between Kepler Weber and Rossi Residencial

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

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

Diversification Opportunities for Kepler Weber and Rossi Residencial

0.62

Correlation Coefficient

Kepler Weber  Rossi Residencial

Poor diversification

The 3 months correlation between Kepler and Rossi is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Kepler Weber SA and Rossi Residencial SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rossi Residencial and Kepler Weber 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 Kepler Weber SA are associated (or correlated) with Rossi Residencial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rossi Residencial has no effect on the direction of Kepler Weber i.e., Kepler Weber and Rossi Residencial go up and down completely randomly.

Pair Corralation between Kepler Weber and Rossi Residencial

Assuming the 90 days trading horizon Kepler Weber SA is expected to generate 0.53 times more return on investment than Rossi Residencial. However, Kepler Weber SA is 1.87 times less risky than Rossi Residencial. It trades about -0.05 of its potential returns per unit of risk. Rossi Residencial SA is currently generating about -0.19 per unit of risk. If you would invest  1,089  in Kepler Weber SA on September 13, 2024 and sell it today you would lose (78.00) from holding Kepler Weber SA or give up 7.16% of portfolio value over 90 days.

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

Kepler Weber SA  vs.  Rossi Residencial SA

Kepler Weber SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kepler Weber SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Rossi Residencial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rossi Residencial SA 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 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.

Pair Trading with Kepler Weber and Rossi Residencial

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

The idea behind Kepler Weber SA and Rossi Residencial 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.