Correlation Between RCE Capital and Cosmos Technology
Can any of the company-specific risk be diversified away by investing in both RCE Capital and Cosmos Technology 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 RCE Capital and Cosmos Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between RCE Capital Berhad and Cosmos Technology International, you can compare the effects of market volatilities on RCE Capital and Cosmos Technology 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 RCE Capital with a short position of Cosmos Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of RCE Capital and Cosmos Technology.
Diversification Opportunities for RCE Capital and Cosmos Technology
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between RCE and Cosmos is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding RCE Capital Berhad and Cosmos Technology Internationa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cosmos Technology and RCE Capital 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 RCE Capital Berhad are associated (or correlated) with Cosmos Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cosmos Technology has no effect on the direction of RCE Capital i.e., RCE Capital and Cosmos Technology go up and down completely randomly.
Pair Corralation between RCE Capital and Cosmos Technology
Assuming the 90 days trading horizon RCE Capital Berhad is expected to generate 0.73 times more return on investment than Cosmos Technology. However, RCE Capital Berhad is 1.38 times less risky than Cosmos Technology. It trades about 0.05 of its potential returns per unit of risk. Cosmos Technology International is currently generating about -0.03 per unit of risk. If you would invest 128.00 in RCE Capital Berhad on October 25, 2024 and sell it today you would earn a total of 20.00 from holding RCE Capital Berhad or generate 15.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.51% |
| Values | Daily Returns |
RCE Capital Berhad vs. Cosmos Technology Internationa
Performance |
| Timeline |
| RCE Capital Berhad |
| Cosmos Technology |
RCE Capital and Cosmos Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RCE Capital and Cosmos Technology
The main advantage of trading using opposite RCE Capital and Cosmos Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RCE Capital position performs unexpectedly, Cosmos Technology 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 Cosmos Technology will offset losses from the drop in Cosmos Technology's long position.| RCE Capital vs. Silver Ridge Holdings | RCE Capital vs. MClean Technologies Bhd | RCE Capital vs. Hong Leong Bank | RCE Capital vs. Alliance Financial Group |
| Cosmos Technology vs. Datasonic Group Bhd | Cosmos Technology vs. Kossan Rubber Industries | Cosmos Technology vs. Computer Forms Bhd | Cosmos Technology vs. Melewar Industrial Group |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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