Correlation Between RSL Electronics and Big Tech
Can any of the company-specific risk be diversified away by investing in both RSL Electronics and Big Tech 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 RSL Electronics and Big Tech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between RSL Electronics and Big Tech 50, you can compare the effects of market volatilities on RSL Electronics and Big Tech 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 RSL Electronics with a short position of Big Tech. Check out your portfolio center. Please also check ongoing floating volatility patterns of RSL Electronics and Big Tech.
Diversification Opportunities for RSL Electronics and Big Tech
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between RSL and Big is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding RSL Electronics and Big Tech 50 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Big Tech 50 and RSL Electronics 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 RSL Electronics are associated (or correlated) with Big Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Big Tech 50 has no effect on the direction of RSL Electronics i.e., RSL Electronics and Big Tech go up and down completely randomly.
Pair Corralation between RSL Electronics and Big Tech
Assuming the 90 days trading horizon RSL Electronics is expected to generate 1.41 times more return on investment than Big Tech. However, RSL Electronics is 1.41 times more volatile than Big Tech 50. It trades about 0.09 of its potential returns per unit of risk. Big Tech 50 is currently generating about -0.14 per unit of risk. If you would invest 63,500 in RSL Electronics on August 30, 2024 and sell it today you would earn a total of 14,200 from holding RSL Electronics or generate 22.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
RSL Electronics vs. Big Tech 50
Performance |
| Timeline |
| RSL Electronics |
| Big Tech 50 |
RSL Electronics and Big Tech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RSL Electronics and Big Tech
The main advantage of trading using opposite RSL Electronics and Big Tech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RSL Electronics position performs unexpectedly, Big Tech 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 Big Tech will offset losses from the drop in Big Tech's long position.| RSL Electronics vs. Ormat Technologies | RSL Electronics vs. Multi Retail Group | RSL Electronics vs. Nova | RSL Electronics vs. B Communications |
| Big Tech vs. Meitav Dash Investments | Big Tech vs. YD More Investments | Big Tech vs. Analyst IMS 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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