Correlation Between Central Puerto and Rewalk Robotics

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

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

Diversification Opportunities for Central Puerto and Rewalk Robotics

0.69

Correlation Coefficient

Central Puerto  Rewalk Robotics

Poor diversification

The 3 months correlation between Central and Rewalk is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Central Puerto SA and Rewalk Robotics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rewalk Robotics and Central Puerto 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 Central Puerto SA are associated (or correlated) with Rewalk Robotics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rewalk Robotics has no effect on the direction of Central Puerto i.e., Central Puerto and Rewalk Robotics go up and down completely randomly.

Pair Corralation between Central Puerto and Rewalk Robotics

Given the investment horizon of 90 days Central Puerto is expected to generate 16.06 times less return on investment than Rewalk Robotics. But when comparing it to its historical volatility, Central Puerto SA is 1.01 times less risky than Rewalk Robotics. It trades about 0.04 of its potential returns per unit of risk. Rewalk Robotics is currently generating about 0.58 of returns per unit of risk over similar time horizon. If you would invest  99.00  in Rewalk Robotics on January 26, 2024 and sell it today you would earn a total of  6.00  from holding Rewalk Robotics or generate 6.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	4.84%
Values	Daily Returns

Central Puerto SA  vs.  Rewalk Robotics

Central Puerto SA

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Central Puerto SA are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Central Puerto may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Rewalk Robotics

Risk-Adjusted Performance

0 of 100

Excellent

Over the last 90 days Rewalk Robotics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite abnormal essential indicators, Rewalk Robotics disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Central Puerto and Rewalk Robotics

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

The idea behind Central Puerto SA and Rewalk Robotics 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.