Correlation Between Astral Foods and RCM TECHNOLOGIES
Can any of the company-specific risk be diversified away by investing in both Astral Foods and RCM TECHNOLOGIES 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 Astral Foods and RCM TECHNOLOGIES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Astral Foods Limited and RCM TECHNOLOGIES, you can compare the effects of market volatilities on Astral Foods and RCM TECHNOLOGIES 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 Astral Foods with a short position of RCM TECHNOLOGIES. Check out your portfolio center. Please also check ongoing floating volatility patterns of Astral Foods and RCM TECHNOLOGIES.
Diversification Opportunities for Astral Foods and RCM TECHNOLOGIES
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Astral and RCM is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Astral Foods Limited and RCM TECHNOLOGIES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RCM TECHNOLOGIES and Astral Foods 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 Astral Foods Limited are associated (or correlated) with RCM TECHNOLOGIES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RCM TECHNOLOGIES has no effect on the direction of Astral Foods i.e., Astral Foods and RCM TECHNOLOGIES go up and down completely randomly.
Pair Corralation between Astral Foods and RCM TECHNOLOGIES
Assuming the 90 days trading horizon Astral Foods is expected to generate 1.71 times less return on investment than RCM TECHNOLOGIES. But when comparing it to its historical volatility, Astral Foods Limited is 1.07 times less risky than RCM TECHNOLOGIES. It trades about 0.14 of its potential returns per unit of risk. RCM TECHNOLOGIES is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 2,000 in RCM TECHNOLOGIES on September 22, 2024 and sell it today you would earn a total of 160.00 from holding RCM TECHNOLOGIES or generate 8.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 81.82% |
| Values | Daily Returns |
Astral Foods Limited vs. RCM TECHNOLOGIES
Performance |
| Timeline |
| Astral Foods Limited |
| RCM TECHNOLOGIES |
Astral Foods and RCM TECHNOLOGIES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Astral Foods and RCM TECHNOLOGIES
The main advantage of trading using opposite Astral Foods and RCM TECHNOLOGIES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Astral Foods position performs unexpectedly, RCM TECHNOLOGIES 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 RCM TECHNOLOGIES will offset losses from the drop in RCM TECHNOLOGIES's long position.| Astral Foods vs. Goodyear Tire Rubber | Astral Foods vs. Fast Retailing Co | Astral Foods vs. FAST RETAIL ADR | Astral Foods vs. CARSALESCOM |
| RCM TECHNOLOGIES vs. Apple Inc | RCM TECHNOLOGIES vs. Apple Inc | RCM TECHNOLOGIES vs. Apple Inc | RCM TECHNOLOGIES vs. Apple Inc |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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