Correlation Between Rainbow Robotics and Formetal
Can any of the company-specific risk be diversified away by investing in both Rainbow Robotics and Formetal 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 Rainbow Robotics and Formetal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rainbow Robotics and Formetal Co, you can compare the effects of market volatilities on Rainbow Robotics and Formetal 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 Rainbow Robotics with a short position of Formetal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rainbow Robotics and Formetal.
Diversification Opportunities for Rainbow Robotics and Formetal
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Rainbow and Formetal is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Rainbow Robotics and Formetal Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Formetal and Rainbow Robotics 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 Rainbow Robotics are associated (or correlated) with Formetal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Formetal has no effect on the direction of Rainbow Robotics i.e., Rainbow Robotics and Formetal go up and down completely randomly.
Pair Corralation between Rainbow Robotics and Formetal
Assuming the 90 days trading horizon Rainbow Robotics is expected to generate 1.53 times more return on investment than Formetal. However, Rainbow Robotics is 1.53 times more volatile than Formetal Co. It trades about -0.01 of its potential returns per unit of risk. Formetal Co is currently generating about -0.05 per unit of risk. If you would invest 16,260,000 in Rainbow Robotics on August 29, 2024 and sell it today you would lose (2,210,000) from holding Rainbow Robotics or give up 13.59% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Rainbow Robotics vs. Formetal Co
Performance |
| Timeline |
| Rainbow Robotics |
| Formetal |
Rainbow Robotics and Formetal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rainbow Robotics and Formetal
The main advantage of trading using opposite Rainbow Robotics and Formetal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rainbow Robotics position performs unexpectedly, Formetal 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 Formetal will offset losses from the drop in Formetal's long position.| Rainbow Robotics vs. Songwon Industrial Co | Rainbow Robotics vs. Green Cross Medical | Rainbow Robotics vs. Myoung Shin Industrial | Rainbow Robotics vs. Seoyon Topmetal Co |
| Formetal vs. Heungkuk Metaltech CoLtd | Formetal vs. Daejung Chemicals Metals | Formetal vs. LG Chemicals | Formetal vs. Duksan Hi Metal |
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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