Correlation Between Recrusul and A1VY34

Can any of the company-specific risk be diversified away by investing in both Recrusul and A1VY34 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 Recrusul and A1VY34 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Recrusul SA and A1VY34, you can compare the effects of market volatilities on Recrusul and A1VY34 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 Recrusul with a short position of A1VY34. Check out your portfolio center. Please also check ongoing floating volatility patterns of Recrusul and A1VY34.

Diversification Opportunities for Recrusul and A1VY34

-0.11

Correlation Coefficient

Recrusul  A1VY34

Good diversification

The 3 months correlation between Recrusul and A1VY34 is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Recrusul SA and A1VY34 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on A1VY34 and Recrusul 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 Recrusul SA are associated (or correlated) with A1VY34. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of A1VY34 has no effect on the direction of Recrusul i.e., Recrusul and A1VY34 go up and down completely randomly.

Pair Corralation between Recrusul and A1VY34

Assuming the 90 days trading horizon Recrusul SA is expected to under-perform the A1VY34. In addition to that, Recrusul is 93.19 times more volatile than A1VY34. It trades about -0.36 of its total potential returns per unit of risk. A1VY34 is currently generating about 0.21 per unit of volatility. If you would invest  57,767  in A1VY34 on September 25, 2024 and sell it today you would earn a total of  175.00  from holding A1VY34 or generate 0.3% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Recrusul SA  vs.  A1VY34

Recrusul SA

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Recrusul SA are ranked lower than 6 (%) 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.

A1VY34

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in A1VY34 are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, A1VY34 is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Recrusul and A1VY34

The main advantage of trading using opposite Recrusul and A1VY34 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Recrusul position performs unexpectedly, A1VY34 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 A1VY34 will offset losses from the drop in A1VY34's long position.

The idea behind Recrusul SA and A1VY34 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.

Check out your portfolio center.

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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.