Correlation Between RCI Hospitality and Companhia Paranaense
Can any of the company-specific risk be diversified away by investing in both RCI Hospitality and Companhia Paranaense 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 RCI Hospitality and Companhia Paranaense into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between RCI Hospitality Holdings and Companhia Paranaense de, you can compare the effects of market volatilities on RCI Hospitality and Companhia Paranaense 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 RCI Hospitality with a short position of Companhia Paranaense. Check out your portfolio center. Please also check ongoing floating volatility patterns of RCI Hospitality and Companhia Paranaense.
Diversification Opportunities for RCI Hospitality and Companhia Paranaense
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between RCI and Companhia is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding RCI Hospitality Holdings and Companhia Paranaense de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Companhia Paranaense and RCI Hospitality 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 RCI Hospitality Holdings are associated (or correlated) with Companhia Paranaense. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Companhia Paranaense has no effect on the direction of RCI Hospitality i.e., RCI Hospitality and Companhia Paranaense go up and down completely randomly.
Pair Corralation between RCI Hospitality and Companhia Paranaense
Given the investment horizon of 90 days RCI Hospitality Holdings is expected to generate 1.02 times more return on investment than Companhia Paranaense. However, RCI Hospitality is 1.02 times more volatile than Companhia Paranaense de. It trades about -0.04 of its potential returns per unit of risk. Companhia Paranaense de is currently generating about -0.05 per unit of risk. If you would invest 7,695 in RCI Hospitality Holdings on September 4, 2024 and sell it today you would lose (2,612) from holding RCI Hospitality Holdings or give up 33.94% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 62.73% |
| Values | Daily Returns |
RCI Hospitality Holdings vs. Companhia Paranaense de
Performance |
| Timeline |
| RCI Hospitality Holdings |
| Companhia Paranaense |
RCI Hospitality and Companhia Paranaense Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RCI Hospitality and Companhia Paranaense
The main advantage of trading using opposite RCI Hospitality and Companhia Paranaense positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RCI Hospitality position performs unexpectedly, Companhia Paranaense 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 Companhia Paranaense will offset losses from the drop in Companhia Paranaense's long position.| RCI Hospitality vs. Brinker International | RCI Hospitality vs. Bloomin Brands | RCI Hospitality vs. BJs Restaurants | RCI Hospitality vs. Dennys Corp |
| Companhia Paranaense vs. The AES | Companhia Paranaense vs. Allete Inc | Companhia Paranaense vs. Avista | Companhia Paranaense vs. Brookfield Infrastructure Partners |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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