Correlation Between Raubex and RCL Foods
Can any of the company-specific risk be diversified away by investing in both Raubex 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 Raubex and RCL Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Raubex and RCL Foods, you can compare the effects of market volatilities on Raubex 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 Raubex with a short position of RCL Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Raubex and RCL Foods.
Diversification Opportunities for Raubex and RCL Foods
Very good diversification
The 3 months correlation between Raubex and RCL is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Raubex and RCL Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RCL Foods and Raubex 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 Raubex 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 Raubex i.e., Raubex and RCL Foods go up and down completely randomly.
Pair Corralation between Raubex and RCL Foods
Assuming the 90 days trading horizon Raubex is expected to generate 0.66 times more return on investment than RCL Foods. However, Raubex is 1.51 times less risky than RCL Foods. It trades about 0.13 of its potential returns per unit of risk. RCL Foods is currently generating about 0.03 per unit of risk. If you would invest 275,000 in Raubex on September 4, 2024 and sell it today you would earn a total of 250,300 from holding Raubex or generate 91.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Raubex vs. RCL Foods
Performance |
| Timeline |
| Raubex |
| RCL Foods |
Raubex and RCL Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Raubex and RCL Foods
The main advantage of trading using opposite Raubex and RCL Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Raubex 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.| Raubex vs. RCL Foods | Raubex vs. Hosken Consolidated Investments | Raubex vs. Bytes Technology | Raubex vs. Capitec Bank Holdings |
| RCL Foods vs. Trematon Capital Investments | RCL Foods vs. Zeder Investments | RCL Foods vs. Standard Bank Group | RCL Foods vs. Afine Investments |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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