Correlation Between RCM TECHNOLOGIES and COSMOSTEEL HLDGS
Can any of the company-specific risk be diversified away by investing in both RCM TECHNOLOGIES and COSMOSTEEL HLDGS 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 COSMOSTEEL HLDGS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between RCM TECHNOLOGIES and COSMOSTEEL HLDGS, you can compare the effects of market volatilities on RCM TECHNOLOGIES and COSMOSTEEL HLDGS 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 COSMOSTEEL HLDGS. Check out your portfolio center. Please also check ongoing floating volatility patterns of RCM TECHNOLOGIES and COSMOSTEEL HLDGS.
Diversification Opportunities for RCM TECHNOLOGIES and COSMOSTEEL HLDGS
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between RCM and COSMOSTEEL is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding RCM TECHNOLOGIES and COSMOSTEEL HLDGS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COSMOSTEEL HLDGS 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 COSMOSTEEL HLDGS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COSMOSTEEL HLDGS has no effect on the direction of RCM TECHNOLOGIES i.e., RCM TECHNOLOGIES and COSMOSTEEL HLDGS go up and down completely randomly.
Pair Corralation between RCM TECHNOLOGIES and COSMOSTEEL HLDGS
Assuming the 90 days trading horizon RCM TECHNOLOGIES is expected to generate 1.17 times more return on investment than COSMOSTEEL HLDGS. However, RCM TECHNOLOGIES is 1.17 times more volatile than COSMOSTEEL HLDGS. It trades about 0.05 of its potential returns per unit of risk. COSMOSTEEL HLDGS is currently generating about 0.01 per unit of risk. If you would invest 1,270 in RCM TECHNOLOGIES on September 12, 2024 and sell it today you would earn a total of 970.00 from holding RCM TECHNOLOGIES or generate 76.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
RCM TECHNOLOGIES vs. COSMOSTEEL HLDGS
Performance |
| Timeline |
| RCM TECHNOLOGIES |
| COSMOSTEEL HLDGS |
RCM TECHNOLOGIES and COSMOSTEEL HLDGS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RCM TECHNOLOGIES and COSMOSTEEL HLDGS
The main advantage of trading using opposite RCM TECHNOLOGIES and COSMOSTEEL HLDGS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RCM TECHNOLOGIES position performs unexpectedly, COSMOSTEEL HLDGS 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 COSMOSTEEL HLDGS will offset losses from the drop in COSMOSTEEL HLDGS's long position.| RCM TECHNOLOGIES vs. Apple Inc | RCM TECHNOLOGIES vs. Apple Inc | RCM TECHNOLOGIES vs. Apple Inc | RCM TECHNOLOGIES vs. Apple Inc |
| COSMOSTEEL HLDGS vs. Apple Inc | COSMOSTEEL HLDGS vs. Apple Inc | COSMOSTEEL HLDGS vs. Apple Inc | COSMOSTEEL HLDGS 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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