Correlation Between RCM TECHNOLOGIES and Chesapeake Utilities
Can any of the company-specific risk be diversified away by investing in both RCM TECHNOLOGIES and Chesapeake Utilities 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 RCM TECHNOLOGIES and Chesapeake Utilities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between RCM TECHNOLOGIES and Chesapeake Utilities, you can compare the effects of market volatilities on RCM TECHNOLOGIES and Chesapeake Utilities 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 RCM TECHNOLOGIES with a short position of Chesapeake Utilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of RCM TECHNOLOGIES and Chesapeake Utilities.
Diversification Opportunities for RCM TECHNOLOGIES and Chesapeake Utilities
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between RCM and Chesapeake is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding RCM TECHNOLOGIES and Chesapeake Utilities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chesapeake Utilities and RCM TECHNOLOGIES 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 RCM TECHNOLOGIES are associated (or correlated) with Chesapeake Utilities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chesapeake Utilities has no effect on the direction of RCM TECHNOLOGIES i.e., RCM TECHNOLOGIES and Chesapeake Utilities go up and down completely randomly.
Pair Corralation between RCM TECHNOLOGIES and Chesapeake Utilities
Assuming the 90 days trading horizon RCM TECHNOLOGIES is expected to generate 1.08 times less return on investment than Chesapeake Utilities. In addition to that, RCM TECHNOLOGIES is 1.9 times more volatile than Chesapeake Utilities. It trades about 0.13 of its total potential returns per unit of risk. Chesapeake Utilities is currently generating about 0.27 per unit of volatility. If you would invest 11,100 in Chesapeake Utilities on August 30, 2024 and sell it today you would earn a total of 1,300 from holding Chesapeake Utilities or generate 11.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
RCM TECHNOLOGIES vs. Chesapeake Utilities
Performance |
| Timeline |
| RCM TECHNOLOGIES |
| Chesapeake Utilities |
RCM TECHNOLOGIES and Chesapeake Utilities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RCM TECHNOLOGIES and Chesapeake Utilities
The main advantage of trading using opposite RCM TECHNOLOGIES and Chesapeake Utilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RCM TECHNOLOGIES position performs unexpectedly, Chesapeake Utilities 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 Chesapeake Utilities will offset losses from the drop in Chesapeake Utilities' long position.| RCM TECHNOLOGIES vs. Apple Inc | RCM TECHNOLOGIES vs. Apple Inc | RCM TECHNOLOGIES vs. Superior Plus Corp | RCM TECHNOLOGIES vs. SIVERS SEMICONDUCTORS AB |
| Chesapeake Utilities vs. Caseys General Stores | Chesapeake Utilities vs. MARKET VECTR RETAIL | Chesapeake Utilities vs. Fast Retailing Co | Chesapeake Utilities vs. SINGAPORE AIRLINES |
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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