Correlation Between Reckitt Benckiser and SupplyMe Capital

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Can any of the company-specific risk be diversified away by investing in both Reckitt Benckiser and SupplyMe Capital 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 Reckitt Benckiser and SupplyMe Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Reckitt Benckiser Group and SupplyMe Capital PLC, you can compare the effects of market volatilities on Reckitt Benckiser and SupplyMe Capital 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 Reckitt Benckiser with a short position of SupplyMe Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Reckitt Benckiser and SupplyMe Capital.

Diversification Opportunities for Reckitt Benckiser and SupplyMe Capital

-0.27
  Correlation Coefficient

Very good diversification

The 3 months correlation between Reckitt and SupplyMe is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Reckitt Benckiser Group and SupplyMe Capital PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SupplyMe Capital PLC and Reckitt Benckiser 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 Reckitt Benckiser Group are associated (or correlated) with SupplyMe Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SupplyMe Capital PLC has no effect on the direction of Reckitt Benckiser i.e., Reckitt Benckiser and SupplyMe Capital go up and down completely randomly.

Pair Corralation between Reckitt Benckiser and SupplyMe Capital

Assuming the 90 days trading horizon Reckitt Benckiser Group is expected to generate 0.16 times more return on investment than SupplyMe Capital. However, Reckitt Benckiser Group is 6.29 times less risky than SupplyMe Capital. It trades about 0.01 of its potential returns per unit of risk. SupplyMe Capital PLC is currently generating about -0.02 per unit of risk. If you would invest  535,728  in Reckitt Benckiser Group on November 2, 2024 and sell it today you would lose (2,528) from holding Reckitt Benckiser Group or give up 0.47% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Reckitt Benckiser Group  vs.  SupplyMe Capital PLC

 Performance 
       Timeline  
Reckitt Benckiser 

Risk-Adjusted Performance

10 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Reckitt Benckiser Group are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Reckitt Benckiser may actually be approaching a critical reversion point that can send shares even higher in March 2025.
SupplyMe Capital PLC 

Risk-Adjusted Performance

5 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in SupplyMe Capital PLC are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, SupplyMe Capital unveiled solid returns over the last few months and may actually be approaching a breakup point.

Reckitt Benckiser and SupplyMe Capital Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Reckitt Benckiser and SupplyMe Capital

The main advantage of trading using opposite Reckitt Benckiser and SupplyMe Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Reckitt Benckiser position performs unexpectedly, SupplyMe Capital 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 SupplyMe Capital will offset losses from the drop in SupplyMe Capital's long position.
The idea behind Reckitt Benckiser Group and SupplyMe Capital PLC 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.
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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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.

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