Correlation Between RCN and NLG
Can any of the company-specific risk be diversified away by investing in both RCN and NLG 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 RCN and NLG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between RCN and NLG, you can compare the effects of market volatilities on RCN and NLG 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 RCN with a short position of NLG. Check out your portfolio center. Please also check ongoing floating volatility patterns of RCN and NLG.
Diversification Opportunities for RCN and NLG
Pay attention - limited upside
The 3 months correlation between RCN and NLG is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding RCN and NLG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NLG and RCN 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 RCN are associated (or correlated) with NLG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NLG has no effect on the direction of RCN i.e., RCN and NLG go up and down completely randomly.
Pair Corralation between RCN and NLG
If you would invest 0.12 in RCN on August 30, 2024 and sell it today you would lose (0.01) from holding RCN or give up 9.49% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 4.35% |
| Values | Daily Returns |
RCN vs. NLG
Performance |
| Timeline |
| RCN |
| NLG |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
RCN and NLG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RCN and NLG
The main advantage of trading using opposite RCN and NLG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RCN position performs unexpectedly, NLG 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 NLG will offset losses from the drop in NLG's long position.The idea behind RCN and NLG pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
Other Complementary Tools
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine |