Correlation Between RMB Holdings and Hammerson PLC
Can any of the company-specific risk be diversified away by investing in both RMB Holdings and Hammerson PLC 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 Hammerson PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between RMB Holdings and Hammerson PLC, you can compare the effects of market volatilities on RMB Holdings and Hammerson PLC 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 Hammerson PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of RMB Holdings and Hammerson PLC.
Diversification Opportunities for RMB Holdings and Hammerson PLC
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between RMB and Hammerson is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding RMB Holdings and Hammerson PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hammerson PLC 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 Hammerson PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hammerson PLC has no effect on the direction of RMB Holdings i.e., RMB Holdings and Hammerson PLC go up and down completely randomly.
Pair Corralation between RMB Holdings and Hammerson PLC
Assuming the 90 days trading horizon RMB Holdings is expected to generate 369.7 times less return on investment than Hammerson PLC. But when comparing it to its historical volatility, RMB Holdings is 15.43 times less risky than Hammerson PLC. It trades about 0.0 of its potential returns per unit of risk. Hammerson PLC is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 61,200 in Hammerson PLC on August 31, 2024 and sell it today you would earn a total of 607,400 from holding Hammerson PLC or generate 992.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.73% |
| Values | Daily Returns |
RMB Holdings vs. Hammerson PLC
Performance |
| Timeline |
| RMB Holdings |
| Hammerson PLC |
RMB Holdings and Hammerson PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RMB Holdings and Hammerson PLC
The main advantage of trading using opposite RMB Holdings and Hammerson PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RMB Holdings position performs unexpectedly, Hammerson PLC 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 Hammerson PLC will offset losses from the drop in Hammerson PLC's long position.| RMB Holdings vs. Ascendis Health | RMB Holdings vs. Life Healthcare | RMB Holdings vs. HomeChoice Investments | RMB Holdings vs. Kap Industrial Holdings |
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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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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