Correlation Between RCM TECHNOLOGIES and Repsol
Can any of the company-specific risk be diversified away by investing in both RCM TECHNOLOGIES and Repsol 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 Repsol into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between RCM TECHNOLOGIES and Repsol, you can compare the effects of market volatilities on RCM TECHNOLOGIES and Repsol 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 Repsol. Check out your portfolio center. Please also check ongoing floating volatility patterns of RCM TECHNOLOGIES and Repsol.
Diversification Opportunities for RCM TECHNOLOGIES and Repsol
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between RCM and Repsol is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding RCM TECHNOLOGIES and Repsol in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Repsol 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 Repsol. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Repsol has no effect on the direction of RCM TECHNOLOGIES i.e., RCM TECHNOLOGIES and Repsol go up and down completely randomly.
Pair Corralation between RCM TECHNOLOGIES and Repsol
Assuming the 90 days trading horizon RCM TECHNOLOGIES is expected to generate 2.97 times more return on investment than Repsol. However, RCM TECHNOLOGIES is 2.97 times more volatile than Repsol. It trades about 0.06 of its potential returns per unit of risk. Repsol is currently generating about -0.07 per unit of risk. If you would invest 2,180 in RCM TECHNOLOGIES on September 12, 2024 and sell it today you would earn a total of 60.00 from holding RCM TECHNOLOGIES or generate 2.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
RCM TECHNOLOGIES vs. Repsol
Performance |
| Timeline |
| RCM TECHNOLOGIES |
| Repsol |
RCM TECHNOLOGIES and Repsol Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RCM TECHNOLOGIES and Repsol
The main advantage of trading using opposite RCM TECHNOLOGIES and Repsol positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RCM TECHNOLOGIES position performs unexpectedly, Repsol 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 Repsol will offset losses from the drop in Repsol's long position.| RCM TECHNOLOGIES vs. Apple Inc | RCM TECHNOLOGIES vs. Apple Inc | RCM TECHNOLOGIES vs. Apple Inc | RCM TECHNOLOGIES vs. Apple Inc |
| Repsol vs. REVO INSURANCE SPA | Repsol vs. RCM TECHNOLOGIES | Repsol vs. Lion Biotechnologies | Repsol vs. Chiba Bank |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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