Correlation Between Indstrias Romi and Camil Alimentos

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

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

Diversification Opportunities for Indstrias Romi and Camil Alimentos

0.8

Correlation Coefficient

Indstrias Romi  Camil Alimentos

Very poor diversification

The 3 months correlation between Indstrias and Camil is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Indstrias Romi SA and Camil Alimentos SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Camil Alimentos SA and Indstrias Romi 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 Indstrias Romi SA are associated (or correlated) with Camil Alimentos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Camil Alimentos SA has no effect on the direction of Indstrias Romi i.e., Indstrias Romi and Camil Alimentos go up and down completely randomly.

Pair Corralation between Indstrias Romi and Camil Alimentos

Assuming the 90 days trading horizon Indstrias Romi SA is expected to generate 0.87 times more return on investment than Camil Alimentos. However, Indstrias Romi SA is 1.15 times less risky than Camil Alimentos. It trades about -0.24 of its potential returns per unit of risk. Camil Alimentos SA is currently generating about -0.28 per unit of risk. If you would invest  993.00  in Indstrias Romi SA on September 5, 2024 and sell it today you would lose (85.00) from holding Indstrias Romi SA or give up 8.56% of portfolio value over 90 days.

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

Indstrias Romi SA  vs.  Camil Alimentos SA

Indstrias Romi SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Indstrias Romi 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.

Camil Alimentos SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Camil Alimentos 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 Indstrias Romi and Camil Alimentos

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

The idea behind Indstrias Romi SA and Camil Alimentos 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.