Correlation Between RCM TECHNOLOGIES and THRACE PLASTICS
Can any of the company-specific risk be diversified away by investing in both RCM TECHNOLOGIES and THRACE PLASTICS 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 THRACE PLASTICS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between RCM TECHNOLOGIES and THRACE PLASTICS, you can compare the effects of market volatilities on RCM TECHNOLOGIES and THRACE PLASTICS 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 THRACE PLASTICS. Check out your portfolio center. Please also check ongoing floating volatility patterns of RCM TECHNOLOGIES and THRACE PLASTICS.
Diversification Opportunities for RCM TECHNOLOGIES and THRACE PLASTICS
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between RCM and THRACE is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding RCM TECHNOLOGIES and THRACE PLASTICS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on THRACE PLASTICS 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 THRACE PLASTICS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of THRACE PLASTICS has no effect on the direction of RCM TECHNOLOGIES i.e., RCM TECHNOLOGIES and THRACE PLASTICS go up and down completely randomly.
Pair Corralation between RCM TECHNOLOGIES and THRACE PLASTICS
Assuming the 90 days trading horizon RCM TECHNOLOGIES is expected to under-perform the THRACE PLASTICS. In addition to that, RCM TECHNOLOGIES is 2.61 times more volatile than THRACE PLASTICS. It trades about -0.07 of its total potential returns per unit of risk. THRACE PLASTICS is currently generating about -0.08 per unit of volatility. If you would invest 400.00 in THRACE PLASTICS on September 13, 2024 and sell it today you would lose (8.00) from holding THRACE PLASTICS or give up 2.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
RCM TECHNOLOGIES vs. THRACE PLASTICS
Performance |
| Timeline |
| RCM TECHNOLOGIES |
| THRACE PLASTICS |
RCM TECHNOLOGIES and THRACE PLASTICS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RCM TECHNOLOGIES and THRACE PLASTICS
The main advantage of trading using opposite RCM TECHNOLOGIES and THRACE PLASTICS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RCM TECHNOLOGIES position performs unexpectedly, THRACE PLASTICS 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 THRACE PLASTICS will offset losses from the drop in THRACE PLASTICS's long position.| RCM TECHNOLOGIES vs. Apple Inc | RCM TECHNOLOGIES vs. Apple Inc | RCM TECHNOLOGIES vs. Apple Inc | RCM TECHNOLOGIES vs. Apple Inc |
| THRACE PLASTICS vs. Apple Inc | THRACE PLASTICS vs. Apple Inc | THRACE PLASTICS vs. Apple Inc | THRACE PLASTICS 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
Other Complementary Tools
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios |