Correlation Between RCM TECHNOLOGIES and ALERION CLEANPOWER
Can any of the company-specific risk be diversified away by investing in both RCM TECHNOLOGIES and ALERION CLEANPOWER 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 ALERION CLEANPOWER into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between RCM TECHNOLOGIES and ALERION CLEANPOWER, you can compare the effects of market volatilities on RCM TECHNOLOGIES and ALERION CLEANPOWER 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 ALERION CLEANPOWER. Check out your portfolio center. Please also check ongoing floating volatility patterns of RCM TECHNOLOGIES and ALERION CLEANPOWER.
Diversification Opportunities for RCM TECHNOLOGIES and ALERION CLEANPOWER
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between RCM and ALERION is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding RCM TECHNOLOGIES and ALERION CLEANPOWER in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ALERION CLEANPOWER 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 ALERION CLEANPOWER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ALERION CLEANPOWER has no effect on the direction of RCM TECHNOLOGIES i.e., RCM TECHNOLOGIES and ALERION CLEANPOWER go up and down completely randomly.
Pair Corralation between RCM TECHNOLOGIES and ALERION CLEANPOWER
Assuming the 90 days trading horizon RCM TECHNOLOGIES is expected to generate 1.37 times more return on investment than ALERION CLEANPOWER. However, RCM TECHNOLOGIES is 1.37 times more volatile than ALERION CLEANPOWER. It trades about -0.01 of its potential returns per unit of risk. ALERION CLEANPOWER is currently generating about -0.04 per unit of risk. If you would invest 2,420 in RCM TECHNOLOGIES on August 24, 2024 and sell it today you would lose (420.00) from holding RCM TECHNOLOGIES or give up 17.36% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
RCM TECHNOLOGIES vs. ALERION CLEANPOWER
Performance |
| Timeline |
| RCM TECHNOLOGIES |
| ALERION CLEANPOWER |
RCM TECHNOLOGIES and ALERION CLEANPOWER Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RCM TECHNOLOGIES and ALERION CLEANPOWER
The main advantage of trading using opposite RCM TECHNOLOGIES and ALERION CLEANPOWER positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RCM TECHNOLOGIES position performs unexpectedly, ALERION CLEANPOWER 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 ALERION CLEANPOWER will offset losses from the drop in ALERION CLEANPOWER's long position.| RCM TECHNOLOGIES vs. Apple Inc | RCM TECHNOLOGIES vs. Apple Inc | RCM TECHNOLOGIES vs. Apple Inc | RCM TECHNOLOGIES vs. Apple Inc |
| ALERION CLEANPOWER vs. Lyxor 1 | ALERION CLEANPOWER vs. Xtrackers LevDAX | ALERION CLEANPOWER vs. Xtrackers ShortDAX |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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