Correlation Between RMB Holdings and Brimstone Investment
Can any of the company-specific risk be diversified away by investing in both RMB Holdings and Brimstone Investment 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 RMB Holdings and Brimstone Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between RMB Holdings and Brimstone Investment, you can compare the effects of market volatilities on RMB Holdings and Brimstone Investment 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 RMB Holdings with a short position of Brimstone Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of RMB Holdings and Brimstone Investment.
Diversification Opportunities for RMB Holdings and Brimstone Investment
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between RMB and Brimstone is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding RMB Holdings and Brimstone Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brimstone Investment and RMB Holdings 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 RMB Holdings are associated (or correlated) with Brimstone Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brimstone Investment has no effect on the direction of RMB Holdings i.e., RMB Holdings and Brimstone Investment go up and down completely randomly.
Pair Corralation between RMB Holdings and Brimstone Investment
Assuming the 90 days trading horizon RMB Holdings is expected to under-perform the Brimstone Investment. But the stock apears to be less risky and, when comparing its historical volatility, RMB Holdings is 1.18 times less risky than Brimstone Investment. The stock trades about -0.01 of its potential returns per unit of risk. The Brimstone Investment is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 50,980 in Brimstone Investment on August 30, 2024 and sell it today you would earn a total of 520.00 from holding Brimstone Investment or generate 1.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
RMB Holdings vs. Brimstone Investment
Performance |
| Timeline |
| RMB Holdings |
| Brimstone Investment |
RMB Holdings and Brimstone Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RMB Holdings and Brimstone Investment
The main advantage of trading using opposite RMB Holdings and Brimstone Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RMB Holdings position performs unexpectedly, Brimstone Investment 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 Brimstone Investment will offset losses from the drop in Brimstone Investment's long position.| RMB Holdings vs. Master Drilling Group | RMB Holdings vs. Standard Bank Group | RMB Holdings vs. RCL Foods | RMB Holdings vs. Ascendis Health |
| Brimstone Investment vs. Tiger Brands | Brimstone Investment vs. RCL Foods | Brimstone Investment vs. Oceana | Brimstone Investment vs. Brimstone 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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