Correlation Between RFTech and SGC Energy
Can any of the company-specific risk be diversified away by investing in both RFTech and SGC Energy 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 RFTech and SGC Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between RFTech Co and SGC Energy Co, you can compare the effects of market volatilities on RFTech and SGC Energy 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 RFTech with a short position of SGC Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of RFTech and SGC Energy.
Diversification Opportunities for RFTech and SGC Energy
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between RFTech and SGC is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding RFTech Co and SGC Energy Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SGC Energy and RFTech 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 RFTech Co are associated (or correlated) with SGC Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SGC Energy has no effect on the direction of RFTech i.e., RFTech and SGC Energy go up and down completely randomly.
Pair Corralation between RFTech and SGC Energy
Assuming the 90 days trading horizon RFTech Co is expected to under-perform the SGC Energy. In addition to that, RFTech is 1.01 times more volatile than SGC Energy Co. It trades about -0.04 of its total potential returns per unit of risk. SGC Energy Co is currently generating about -0.01 per unit of volatility. If you would invest 2,971,153 in SGC Energy Co on September 3, 2024 and sell it today you would lose (421,153) from holding SGC Energy Co or give up 14.17% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
RFTech Co vs. SGC Energy Co
Performance |
| Timeline |
| RFTech |
| SGC Energy |
RFTech and SGC Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RFTech and SGC Energy
The main advantage of trading using opposite RFTech and SGC Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RFTech position performs unexpectedly, SGC Energy 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 SGC Energy will offset losses from the drop in SGC Energy's long position.| RFTech vs. Lake Materials Co | RFTech vs. LS Materials | RFTech vs. Hana Materials | RFTech vs. Infinitt Healthcare Co |
| SGC Energy vs. FNC Entertainment Co | SGC Energy vs. Next Entertainment World | SGC Energy vs. Homecast CoLtd | SGC Energy vs. Home Center Holdings |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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