Correlation Between CA Sales and RCL Foods
Can any of the company-specific risk be diversified away by investing in both CA Sales 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 CA Sales and RCL Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CA Sales Holdings and RCL Foods, you can compare the effects of market volatilities on CA Sales 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 CA Sales with a short position of RCL Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of CA Sales and RCL Foods.
Diversification Opportunities for CA Sales and RCL Foods
Modest diversification
The 3 months correlation between CAA and RCL is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding CA Sales Holdings and RCL Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RCL Foods and CA Sales 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 CA Sales Holdings 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 CA Sales i.e., CA Sales and RCL Foods go up and down completely randomly.
Pair Corralation between CA Sales and RCL Foods
Assuming the 90 days trading horizon CA Sales Holdings is expected to generate 2.59 times more return on investment than RCL Foods. However, CA Sales is 2.59 times more volatile than RCL Foods. It trades about 0.05 of its potential returns per unit of risk. RCL Foods is currently generating about -0.12 per unit of risk. If you would invest 157,000 in CA Sales Holdings on August 30, 2024 and sell it today you would earn a total of 3,000 from holding CA Sales Holdings or generate 1.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CA Sales Holdings vs. RCL Foods
Performance |
| Timeline |
| CA Sales Holdings |
| RCL Foods |
CA Sales and RCL Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CA Sales and RCL Foods
The main advantage of trading using opposite CA Sales and RCL Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CA Sales 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.| CA Sales vs. Growthpoint Properties | CA Sales vs. AfricaRhodium ETF | CA Sales vs. CoreShares Preference Share | CA Sales vs. CoreShares TotalWldStock ETF |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
Other Complementary Tools
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Global Correlations Find global opportunities by holding instruments from different markets |