Correlation Between Refinaria and Inepar SA

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

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

Diversification Opportunities for Refinaria and Inepar SA

0.84

Correlation Coefficient

Refinaria  Inepar SA

Very poor diversification

The 3 months correlation between Refinaria and Inepar is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Refinaria de Petrleos and Inepar SA Indstria in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inepar SA Indstria and Refinaria 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 Refinaria de Petrleos are associated (or correlated) with Inepar SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inepar SA Indstria has no effect on the direction of Refinaria i.e., Refinaria and Inepar SA go up and down completely randomly.

Pair Corralation between Refinaria and Inepar SA

Assuming the 90 days trading horizon Refinaria de Petrleos is expected to under-perform the Inepar SA. But the stock apears to be less risky and, when comparing its historical volatility, Refinaria de Petrleos is 1.13 times less risky than Inepar SA. The stock trades about -0.08 of its potential returns per unit of risk. The Inepar SA Indstria is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  185.00  in Inepar SA Indstria on September 13, 2024 and sell it today you would lose (26.00) from holding Inepar SA Indstria or give up 14.05% of portfolio value over 90 days.

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

Refinaria de Petrleos  vs.  Inepar SA Indstria

Refinaria de Petrleos

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Refinaria de Petrleos 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.

Inepar SA Indstria

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Inepar SA Indstria has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Preferred Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Refinaria and Inepar SA

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

The idea behind Refinaria de Petrleos and Inepar SA Indstria 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..