Correlation Between HHG Capital and RF ACQUISITION
Can any of the company-specific risk be diversified away by investing in both HHG Capital and RF ACQUISITION 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 HHG Capital and RF ACQUISITION into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HHG Capital and RF ACQUISITION P, you can compare the effects of market volatilities on HHG Capital and RF ACQUISITION 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 HHG Capital with a short position of RF ACQUISITION. Check out your portfolio center. Please also check ongoing floating volatility patterns of HHG Capital and RF ACQUISITION.
Diversification Opportunities for HHG Capital and RF ACQUISITION
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between HHG and RFACW is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding HHG Capital and RF ACQUISITION P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RF ACQUISITION P and HHG 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 HHG Capital are associated (or correlated) with RF ACQUISITION. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RF ACQUISITION P has no effect on the direction of HHG Capital i.e., HHG Capital and RF ACQUISITION go up and down completely randomly.
Pair Corralation between HHG Capital and RF ACQUISITION
Assuming the 90 days horizon HHG Capital is expected to generate 1.65 times less return on investment than RF ACQUISITION. But when comparing it to its historical volatility, HHG Capital is 1.41 times less risky than RF ACQUISITION. It trades about 0.16 of its potential returns per unit of risk. RF ACQUISITION P is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 1.25 in RF ACQUISITION P on September 5, 2024 and sell it today you would earn a total of 0.83 from holding RF ACQUISITION P or generate 66.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 71.32% |
| Values | Daily Returns |
HHG Capital vs. RF ACQUISITION P
Performance |
| Timeline |
| HHG Capital |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Good
| RF ACQUISITION P |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Strong
HHG Capital and RF ACQUISITION Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HHG Capital and RF ACQUISITION
The main advantage of trading using opposite HHG Capital and RF ACQUISITION positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HHG Capital position performs unexpectedly, RF ACQUISITION 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 RF ACQUISITION will offset losses from the drop in RF ACQUISITION's long position.The idea behind HHG Capital and RF ACQUISITION P pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| RF ACQUISITION vs. Alpha One | RF ACQUISITION vs. Manaris Corp | RF ACQUISITION vs. SCOR PK | RF ACQUISITION vs. Aquagold International |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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