Correlation Between RCL Foods and Kap Industrial
Can any of the company-specific risk be diversified away by investing in both RCL Foods and Kap Industrial 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 RCL Foods and Kap Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between RCL Foods and Kap Industrial Holdings, you can compare the effects of market volatilities on RCL Foods and Kap Industrial 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 RCL Foods with a short position of Kap Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of RCL Foods and Kap Industrial.
Diversification Opportunities for RCL Foods and Kap Industrial
-0.74 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between RCL and Kap is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding RCL Foods and Kap Industrial Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kap Industrial Holdings and RCL Foods 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 RCL Foods are associated (or correlated) with Kap Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kap Industrial Holdings has no effect on the direction of RCL Foods i.e., RCL Foods and Kap Industrial go up and down completely randomly.
Pair Corralation between RCL Foods and Kap Industrial
Assuming the 90 days trading horizon RCL Foods is expected to generate 0.77 times more return on investment than Kap Industrial. However, RCL Foods is 1.3 times less risky than Kap Industrial. It trades about -0.02 of its potential returns per unit of risk. Kap Industrial Holdings is currently generating about -0.14 per unit of risk. If you would invest 96,000 in RCL Foods on November 3, 2024 and sell it today you would lose (1,000.00) from holding RCL Foods or give up 1.04% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
RCL Foods vs. Kap Industrial Holdings
Performance |
| Timeline |
| RCL Foods |
| Kap Industrial Holdings |
RCL Foods and Kap Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RCL Foods and Kap Industrial
The main advantage of trading using opposite RCL Foods and Kap Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RCL Foods position performs unexpectedly, Kap Industrial 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 Kap Industrial will offset losses from the drop in Kap Industrial's long position.| RCL Foods vs. Bytes Technology | RCL Foods vs. Deneb Investments | RCL Foods vs. Datatec | RCL Foods vs. Reinet Investments SCA |
| Kap Industrial vs. Mantengu Mining | Kap Industrial vs. CA Sales Holdings | Kap Industrial vs. RCL Foods | Kap Industrial vs. Standard Bank Group |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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