Correlation Between RF Materials and RFTech
Can any of the company-specific risk be diversified away by investing in both RF Materials and RFTech 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 RF Materials and RFTech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between RF Materials Co and RFTech Co, you can compare the effects of market volatilities on RF Materials and RFTech 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 RF Materials with a short position of RFTech. Check out your portfolio center. Please also check ongoing floating volatility patterns of RF Materials and RFTech.
Diversification Opportunities for RF Materials and RFTech
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between 327260 and RFTech is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding RF Materials Co and RFTech Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RFTech and RF Materials 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 RF Materials Co are associated (or correlated) with RFTech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RFTech has no effect on the direction of RF Materials i.e., RF Materials and RFTech go up and down completely randomly.
Pair Corralation between RF Materials and RFTech
Assuming the 90 days trading horizon RF Materials Co is expected to under-perform the RFTech. In addition to that, RF Materials is 2.23 times more volatile than RFTech Co. It trades about -0.2 of its total potential returns per unit of risk. RFTech Co is currently generating about 0.14 per unit of volatility. If you would invest 304,000 in RFTech Co on August 25, 2024 and sell it today you would earn a total of 19,000 from holding RFTech Co or generate 6.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
RF Materials Co vs. RFTech Co
Performance |
| Timeline |
| RF Materials |
| RFTech |
RF Materials and RFTech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RF Materials and RFTech
The main advantage of trading using opposite RF Materials and RFTech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RF Materials position performs unexpectedly, RFTech 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 RFTech will offset losses from the drop in RFTech's long position.| RF Materials vs. Shinsegae Information Communication | RF Materials vs. BIT Computer Co | RF Materials vs. Korea Computer | RF Materials vs. Dongwon Metal Co |
| RFTech vs. Samsung Electronics Co | RFTech vs. Samsung Electronics Co | RFTech vs. Hyundai Motor Co | RFTech vs. Hyundai Motor |
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.
Other Complementary Tools
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device |