Correlation Between RFTech and RF Materials
Can any of the company-specific risk be diversified away by investing in both RFTech and RF Materials 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 RF Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between RFTech Co and RF Materials Co, you can compare the effects of market volatilities on RFTech and RF Materials 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 RF Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of RFTech and RF Materials.
Diversification Opportunities for RFTech and RF Materials
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between RFTech and 327260 is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding RFTech Co and RF Materials Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RF Materials 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 RF Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RF Materials has no effect on the direction of RFTech i.e., RFTech and RF Materials go up and down completely randomly.
Pair Corralation between RFTech and RF Materials
Assuming the 90 days trading horizon RFTech Co is expected to generate 0.41 times more return on investment than RF Materials. However, RFTech Co is 2.46 times less risky than RF Materials. It trades about 0.34 of its potential returns per unit of risk. RF Materials Co is currently generating about -0.2 per unit of risk. If you would invest 289,000 in RFTech Co on August 29, 2024 and sell it today you would earn a total of 41,500 from holding RFTech Co or generate 14.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
RFTech Co vs. RF Materials Co
Performance |
| Timeline |
| RFTech |
| RF Materials |
RFTech and RF Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RFTech and RF Materials
The main advantage of trading using opposite RFTech and RF Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RFTech position performs unexpectedly, RF Materials 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 RF Materials will offset losses from the drop in RF Materials' long position.| RFTech vs. Daou Technology | RFTech vs. Ssangyong Information Communication | RFTech vs. Digital Power Communications | RFTech vs. Sangsin Energy Display |
| RF Materials vs. SK Hynix | RF Materials vs. People Technology | RF Materials vs. SIMMTECH Co | RF Materials vs. Haesung DS Co |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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