Correlation Between RFTech and Raontech
Can any of the company-specific risk be diversified away by investing in both RFTech and Raontech 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 Raontech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between RFTech Co and Raontech, you can compare the effects of market volatilities on RFTech and Raontech 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 Raontech. Check out your portfolio center. Please also check ongoing floating volatility patterns of RFTech and Raontech.
Diversification Opportunities for RFTech and Raontech
Very weak diversification
The 3 months correlation between RFTech and Raontech is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding RFTech Co and Raontech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Raontech 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 Raontech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Raontech has no effect on the direction of RFTech i.e., RFTech and Raontech go up and down completely randomly.
Pair Corralation between RFTech and Raontech
Assuming the 90 days trading horizon RFTech Co is expected to under-perform the Raontech. But the stock apears to be less risky and, when comparing its historical volatility, RFTech Co is 2.48 times less risky than Raontech. The stock trades about -0.03 of its potential returns per unit of risk. The Raontech is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 542,000 in Raontech on November 2, 2024 and sell it today you would lose (222,000) from holding Raontech or give up 40.96% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 96.45% |
| Values | Daily Returns |
RFTech Co vs. Raontech
Performance |
| Timeline |
| RFTech |
| Raontech |
RFTech and Raontech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RFTech and Raontech
The main advantage of trading using opposite RFTech and Raontech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RFTech position performs unexpectedly, Raontech 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 Raontech will offset losses from the drop in Raontech's long position.The idea behind RFTech Co and Raontech 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.| Raontech vs. BIT Computer Co | Raontech vs. Display Tech Co | Raontech vs. Sangsin Energy Display | Raontech vs. Inzi Display CoLtd |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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