Correlation Between RCL Foods and Sebata Holdings
Can any of the company-specific risk be diversified away by investing in both RCL Foods and Sebata Holdings 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 Sebata Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between RCL Foods and Sebata Holdings, you can compare the effects of market volatilities on RCL Foods and Sebata Holdings 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 Sebata Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of RCL Foods and Sebata Holdings.
Diversification Opportunities for RCL Foods and Sebata Holdings
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between RCL and Sebata is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding RCL Foods and Sebata Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sebata 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 Sebata Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sebata Holdings has no effect on the direction of RCL Foods i.e., RCL Foods and Sebata Holdings go up and down completely randomly.
Pair Corralation between RCL Foods and Sebata Holdings
Assuming the 90 days trading horizon RCL Foods is expected to generate 0.59 times more return on investment than Sebata Holdings. However, RCL Foods is 1.7 times less risky than Sebata Holdings. It trades about -0.02 of its potential returns per unit of risk. Sebata Holdings is currently generating about -0.04 per unit of risk. If you would invest 109,700 in RCL Foods on September 3, 2024 and sell it today you would lose (17,300) from holding RCL Foods or give up 15.77% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
RCL Foods vs. Sebata Holdings
Performance |
| Timeline |
| RCL Foods |
| Sebata Holdings |
RCL Foods and Sebata Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RCL Foods and Sebata Holdings
The main advantage of trading using opposite RCL Foods and Sebata Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RCL Foods position performs unexpectedly, Sebata Holdings 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 Sebata Holdings will offset losses from the drop in Sebata Holdings' long position.| RCL Foods vs. Blue Label Telecoms | RCL Foods vs. African Media Entertainment | RCL Foods vs. Life Healthcare | RCL Foods vs. Kap Industrial Holdings |
| Sebata Holdings vs. CA Sales Holdings | Sebata Holdings vs. E Media Holdings | Sebata Holdings vs. Harmony Gold Mining | Sebata Holdings vs. Kumba Iron Ore |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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