Correlation Between Renergen and Brait SE

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

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

Diversification Opportunities for Renergen and Brait SE

-0.81

Correlation Coefficient

Renergen  Brait SE

Pay attention - limited upside

The 3 months correlation between Renergen and Brait is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Renergen and Brait SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brait SE and Renergen 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 Renergen are associated (or correlated) with Brait SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brait SE has no effect on the direction of Renergen i.e., Renergen and Brait SE go up and down completely randomly.

Pair Corralation between Renergen and Brait SE

Assuming the 90 days trading horizon Renergen is expected to under-perform the Brait SE. But the stock apears to be less risky and, when comparing its historical volatility, Renergen is 1.09 times less risky than Brait SE. The stock trades about -0.2 of its potential returns per unit of risk. The Brait SE is currently generating about 0.4 of returns per unit of risk over similar time horizon. If you would invest  16,400  in Brait SE on September 3, 2024 and sell it today you would earn a total of  3,700  from holding Brait SE or generate 22.56% return on investment over 90 days.

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

Renergen  vs.  Brait SE

Renergen

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Renergen has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Brait SE

Risk-Adjusted Performance

31 of 100

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Brait SE are ranked lower than 31 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Brait SE exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Renergen and Brait SE

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

The idea behind Renergen and Brait SE 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.