Correlation Between Recrusul and PDG Realty

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

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

Diversification Opportunities for Recrusul and PDG Realty

-0.66

Correlation Coefficient

Recrusul  PDG Realty

Excellent diversification

The 3 months correlation between Recrusul and PDG is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Recrusul SA and PDG Realty SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PDG Realty SA 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 PDG Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PDG Realty SA has no effect on the direction of Recrusul i.e., Recrusul and PDG Realty go up and down completely randomly.

Pair Corralation between Recrusul and PDG Realty

Assuming the 90 days trading horizon Recrusul SA is expected to generate 0.28 times more return on investment than PDG Realty. However, Recrusul SA is 3.53 times less risky than PDG Realty. It trades about 0.13 of its potential returns per unit of risk. PDG Realty SA is currently generating about -0.14 per unit of risk. If you would invest  101.00  in Recrusul SA on September 3, 2024 and sell it today you would earn a total of  57.00  from holding Recrusul SA or generate 56.44% return on investment over 90 days.

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

Recrusul SA  vs.  PDG Realty SA

Recrusul SA

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Recrusul SA are ranked lower than 10 (%) 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.

PDG Realty SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PDG Realty 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 Recrusul and PDG Realty

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

The idea behind Recrusul SA and PDG Realty 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.

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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.