Correlation Between RF Materials and Hurum
Can any of the company-specific risk be diversified away by investing in both RF Materials and Hurum 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 Hurum 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 Hurum Co, you can compare the effects of market volatilities on RF Materials and Hurum 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 Hurum. Check out your portfolio center. Please also check ongoing floating volatility patterns of RF Materials and Hurum.
Diversification Opportunities for RF Materials and Hurum
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between 327260 and Hurum is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding RF Materials Co and Hurum Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hurum 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 Hurum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hurum has no effect on the direction of RF Materials i.e., RF Materials and Hurum go up and down completely randomly.
Pair Corralation between RF Materials and Hurum
Assuming the 90 days trading horizon RF Materials Co is expected to under-perform the Hurum. In addition to that, RF Materials is 1.22 times more volatile than Hurum Co. It trades about -0.05 of its total potential returns per unit of risk. Hurum Co is currently generating about -0.03 per unit of volatility. If you would invest 121,700 in Hurum Co on October 12, 2024 and sell it today you would lose (48,700) from holding Hurum Co or give up 40.02% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
RF Materials Co vs. Hurum Co
Performance |
| Timeline |
| RF Materials |
| Hurum |
RF Materials and Hurum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RF Materials and Hurum
The main advantage of trading using opposite RF Materials and Hurum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RF Materials position performs unexpectedly, Hurum 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 Hurum will offset losses from the drop in Hurum's long position.| RF Materials vs. Dong A Steel Technology | RF Materials vs. BIT Computer Co | RF Materials vs. T3 Entertainment Co | RF Materials vs. TJ media Co |
| Hurum vs. Handok Clean Tech | Hurum vs. TOPMATERIAL LTD | Hurum vs. Polaris Office Corp | Hurum vs. RF Materials 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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