Correlation Between Wool Industry and Revoil SA

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

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

Diversification Opportunities for Wool Industry and Revoil SA

0.76

Correlation Coefficient

Wool Industry  Revoil SA

Poor diversification

The 3 months correlation between Wool and Revoil is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Wool Industry Tria and Revoil SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Revoil SA and Wool Industry 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 Wool Industry Tria are associated (or correlated) with Revoil SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Revoil SA has no effect on the direction of Wool Industry i.e., Wool Industry and Revoil SA go up and down completely randomly.

Pair Corralation between Wool Industry and Revoil SA

Assuming the 90 days trading horizon Wool Industry Tria is expected to generate 3.43 times more return on investment than Revoil SA. However, Wool Industry is 3.43 times more volatile than Revoil SA. It trades about 0.19 of its potential returns per unit of risk. Revoil SA is currently generating about 0.09 per unit of risk. If you would invest  450.00  in Wool Industry Tria on April 25, 2025 and sell it today you would earn a total of  330.00  from holding Wool Industry Tria or generate 73.33% return on investment over 90 days.

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

Wool Industry Tria  vs.  Revoil SA

Wool Industry Tria

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Wool Industry Tria are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Wool Industry unveiled solid returns over the last few months and may actually be approaching a breakup point.

Revoil SA

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Revoil SA are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Revoil SA may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Wool Industry and Revoil SA

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

The idea behind Wool Industry Tria and Revoil 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 Global Correlations module to find global opportunities by holding instruments from different markets.