Correlation Between Peak Resources and RCM TECHNOLOGIES
Can any of the company-specific risk be diversified away by investing in both Peak Resources 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 Peak Resources and RCM TECHNOLOGIES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Peak Resources Limited and RCM TECHNOLOGIES, you can compare the effects of market volatilities on Peak Resources 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 Peak Resources with a short position of RCM TECHNOLOGIES. Check out your portfolio center. Please also check ongoing floating volatility patterns of Peak Resources and RCM TECHNOLOGIES.
Diversification Opportunities for Peak Resources and RCM TECHNOLOGIES
-0.82 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Peak and RCM is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Peak Resources Limited and RCM TECHNOLOGIES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RCM TECHNOLOGIES and Peak Resources 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 Peak Resources 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 Peak Resources i.e., Peak Resources and RCM TECHNOLOGIES go up and down completely randomly.
Pair Corralation between Peak Resources and RCM TECHNOLOGIES
Assuming the 90 days horizon Peak Resources Limited is expected to generate 3.61 times more return on investment than RCM TECHNOLOGIES. However, Peak Resources is 3.61 times more volatile than RCM TECHNOLOGIES. It trades about 0.1 of its potential returns per unit of risk. RCM TECHNOLOGIES is currently generating about 0.06 per unit of risk. If you would invest 5.80 in Peak Resources Limited on September 12, 2024 and sell it today you would earn a total of 0.70 from holding Peak Resources Limited or generate 12.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Peak Resources Limited vs. RCM TECHNOLOGIES
Performance |
| Timeline |
| Peak Resources |
| RCM TECHNOLOGIES |
Peak Resources and RCM TECHNOLOGIES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Peak Resources and RCM TECHNOLOGIES
The main advantage of trading using opposite Peak Resources and RCM TECHNOLOGIES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Peak Resources 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.| Peak Resources vs. NEWELL RUBBERMAID | Peak Resources vs. The Yokohama Rubber | Peak Resources vs. Hyster Yale Materials Handling | Peak Resources vs. Park Hotels Resorts |
| 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 Transaction History module to view history of all your transactions and understand their impact on performance.
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