Correlation Between RCI Hospitality and NH Foods
Can any of the company-specific risk be diversified away by investing in both RCI Hospitality and NH Foods 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 NH Foods 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 NH Foods, you can compare the effects of market volatilities on RCI Hospitality and NH Foods 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 NH Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of RCI Hospitality and NH Foods.
Diversification Opportunities for RCI Hospitality and NH Foods
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between RCI and NI6 is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding RCI Hospitality Holdings and NH Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NH Foods 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 NH Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NH Foods has no effect on the direction of RCI Hospitality i.e., RCI Hospitality and NH Foods go up and down completely randomly.
Pair Corralation between RCI Hospitality and NH Foods
Assuming the 90 days trading horizon RCI Hospitality Holdings is expected to generate 0.71 times more return on investment than NH Foods. However, RCI Hospitality Holdings is 1.4 times less risky than NH Foods. It trades about -0.2 of its potential returns per unit of risk. NH Foods is currently generating about -0.18 per unit of risk. If you would invest 5,500 in RCI Hospitality Holdings on November 8, 2024 and sell it today you would lose (400.00) from holding RCI Hospitality Holdings or give up 7.27% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
RCI Hospitality Holdings vs. NH Foods
Performance |
| Timeline |
| RCI Hospitality Holdings |
| NH Foods |
RCI Hospitality and NH Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RCI Hospitality and NH Foods
The main advantage of trading using opposite RCI Hospitality and NH Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RCI Hospitality position performs unexpectedly, NH Foods 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 NH Foods will offset losses from the drop in NH Foods' long position.| RCI Hospitality vs. SIVERS SEMICONDUCTORS AB | RCI Hospitality vs. NorAm Drilling AS | RCI Hospitality vs. Volkswagen AG | RCI Hospitality vs. Darden Restaurants |
| NH Foods vs. Dairy Farm International | NH Foods vs. Hanison Construction Holdings | NH Foods vs. Safety Insurance Group | NH Foods vs. ALEFARM BREWING DK 05 |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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