Correlation Between BII Railway and RCI Hospitality
Can any of the company-specific risk be diversified away by investing in both BII Railway and RCI Hospitality 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 BII Railway and RCI Hospitality into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BII Railway Transportation and RCI Hospitality Holdings, you can compare the effects of market volatilities on BII Railway and RCI Hospitality 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 BII Railway with a short position of RCI Hospitality. Check out your portfolio center. Please also check ongoing floating volatility patterns of BII Railway and RCI Hospitality.
Diversification Opportunities for BII Railway and RCI Hospitality
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between BII and RCI is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding BII Railway Transportation and RCI Hospitality Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RCI Hospitality Holdings and BII Railway 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 BII Railway Transportation are associated (or correlated) with RCI Hospitality. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RCI Hospitality Holdings has no effect on the direction of BII Railway i.e., BII Railway and RCI Hospitality go up and down completely randomly.
Pair Corralation between BII Railway and RCI Hospitality
Assuming the 90 days horizon BII Railway Transportation is expected to generate 0.95 times more return on investment than RCI Hospitality. However, BII Railway Transportation is 1.06 times less risky than RCI Hospitality. It trades about -0.06 of its potential returns per unit of risk. RCI Hospitality Holdings is currently generating about -0.21 per unit of risk. If you would invest 2.80 in BII Railway Transportation on October 24, 2024 and sell it today you would lose (0.05) from holding BII Railway Transportation or give up 1.79% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BII Railway Transportation vs. RCI Hospitality Holdings
Performance |
| Timeline |
| BII Railway Transpor |
| RCI Hospitality Holdings |
BII Railway and RCI Hospitality Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BII Railway and RCI Hospitality
The main advantage of trading using opposite BII Railway and RCI Hospitality positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BII Railway position performs unexpectedly, RCI Hospitality 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 RCI Hospitality will offset losses from the drop in RCI Hospitality's long position.| BII Railway vs. National Health Investors | BII Railway vs. OPKO HEALTH | BII Railway vs. CVS Health | BII Railway vs. Jacquet Metal Service |
| RCI Hospitality vs. ALBIS LEASING AG | RCI Hospitality vs. The Trade Desk | RCI Hospitality vs. H2O Retailing | RCI Hospitality vs. Lendlease 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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