Correlation Between Indstrias Romi and T4F Entretenimento

Can any of the company-specific risk be diversified away by investing in both Indstrias Romi and T4F Entretenimento 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 T4F Entretenimento 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 T4F Entretenimento SA, you can compare the effects of market volatilities on Indstrias Romi and T4F Entretenimento 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 T4F Entretenimento. Check out your portfolio center. Please also check ongoing floating volatility patterns of Indstrias Romi and T4F Entretenimento.

Diversification Opportunities for Indstrias Romi and T4F Entretenimento

0.33

Correlation Coefficient

Indstrias Romi  T4F Entretenimento

Weak diversification

The 3 months correlation between Indstrias and T4F is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Indstrias Romi SA and T4F Entretenimento SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on T4F Entretenimento 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 T4F Entretenimento. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of T4F Entretenimento has no effect on the direction of Indstrias Romi i.e., Indstrias Romi and T4F Entretenimento go up and down completely randomly.

Pair Corralation between Indstrias Romi and T4F Entretenimento

Assuming the 90 days trading horizon Indstrias Romi SA is expected to under-perform the T4F Entretenimento. But the stock apears to be less risky and, when comparing its historical volatility, Indstrias Romi SA is 3.01 times less risky than T4F Entretenimento. The stock trades about -0.07 of its potential returns per unit of risk. The T4F Entretenimento SA is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  640.00  in T4F Entretenimento SA on April 20, 2025 and sell it today you would earn a total of  26.00  from holding T4F Entretenimento SA or generate 4.06% return on investment over 90 days.

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

Indstrias Romi SA  vs.  T4F Entretenimento SA

Indstrias Romi SA

Risk-Adjusted Performance

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 comparatively stable basic indicators, Indstrias Romi is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

T4F Entretenimento

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in T4F Entretenimento SA are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, T4F Entretenimento may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Indstrias Romi and T4F Entretenimento

The main advantage of trading using opposite Indstrias Romi and T4F Entretenimento positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Indstrias Romi position performs unexpectedly, T4F Entretenimento 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 T4F Entretenimento will offset losses from the drop in T4F Entretenimento's long position.

The idea behind Indstrias Romi SA and T4F Entretenimento 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.

Check out your portfolio center.

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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.