Correlation Between Recrusul and Este Lauder

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

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

Diversification Opportunities for Recrusul and Este Lauder

-0.61

Correlation Coefficient

Recrusul  Este Lauder

Excellent diversification

The 3 months correlation between Recrusul and Este is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Recrusul SA and The Este Lauder in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Este Lauder 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 Este Lauder. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Este Lauder has no effect on the direction of Recrusul i.e., Recrusul and Este Lauder go up and down completely randomly.

Pair Corralation between Recrusul and Este Lauder

Assuming the 90 days trading horizon Recrusul SA is expected to generate 2.01 times more return on investment than Este Lauder. However, Recrusul is 2.01 times more volatile than The Este Lauder. It trades about 0.09 of its potential returns per unit of risk. The Este Lauder is currently generating about -0.02 per unit of risk. If you would invest  100.00  in Recrusul SA on September 24, 2024 and sell it today you would earn a total of  28.00  from holding Recrusul SA or generate 28.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.41%
Values	Daily Returns

Recrusul SA  vs.  The Este Lauder

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.

Este Lauder

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Este Lauder has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental indicators, Este Lauder 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 Este Lauder

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

The idea behind Recrusul SA and The Este Lauder 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.