Correlation Between Ascendis Health and RCL Foods
Can any of the company-specific risk be diversified away by investing in both Ascendis Health and RCL Foods 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 Ascendis Health and RCL Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ascendis Health and RCL Foods, you can compare the effects of market volatilities on Ascendis Health and RCL Foods 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 Ascendis Health with a short position of RCL Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ascendis Health and RCL Foods.
Diversification Opportunities for Ascendis Health and RCL Foods
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ascendis and RCL is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Ascendis Health and RCL Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RCL Foods and Ascendis Health 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 Ascendis Health are associated (or correlated) with RCL Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RCL Foods has no effect on the direction of Ascendis Health i.e., Ascendis Health and RCL Foods go up and down completely randomly.
Pair Corralation between Ascendis Health and RCL Foods
Assuming the 90 days trading horizon Ascendis Health is expected to generate 0.83 times more return on investment than RCL Foods. However, Ascendis Health is 1.2 times less risky than RCL Foods. It trades about 0.03 of its potential returns per unit of risk. RCL Foods is currently generating about 0.01 per unit of risk. If you would invest 6,300 in Ascendis Health on August 27, 2024 and sell it today you would earn a total of 1,100 from holding Ascendis Health or generate 17.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ascendis Health vs. RCL Foods
Performance |
| Timeline |
| Ascendis Health |
| RCL Foods |
Ascendis Health and RCL Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ascendis Health and RCL Foods
The main advantage of trading using opposite Ascendis Health and RCL Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ascendis Health position performs unexpectedly, RCL Foods 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 RCL Foods will offset losses from the drop in RCL Foods' long position.| Ascendis Health vs. Trematon Capital Investments | Ascendis Health vs. Hosken Consolidated Investments | Ascendis Health vs. Allied Electronics | Ascendis Health vs. Kumba Iron Ore |
| RCL Foods vs. Standard Bank Group | RCL Foods vs. Ascendis Health | RCL Foods vs. City Lodge Hotels | RCL Foods vs. Advtech |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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