Correlation Between RSL Electronics and Automatic Bank
Can any of the company-specific risk be diversified away by investing in both RSL Electronics and Automatic Bank 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 Automatic Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between RSL Electronics and Automatic Bank Services, you can compare the effects of market volatilities on RSL Electronics and Automatic Bank 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 Automatic Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of RSL Electronics and Automatic Bank.
Diversification Opportunities for RSL Electronics and Automatic Bank
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between RSL and Automatic is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding RSL Electronics and Automatic Bank Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Automatic Bank Services 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 Automatic Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Automatic Bank Services has no effect on the direction of RSL Electronics i.e., RSL Electronics and Automatic Bank go up and down completely randomly.
Pair Corralation between RSL Electronics and Automatic Bank
Assuming the 90 days trading horizon RSL Electronics is expected to generate 2.96 times less return on investment than Automatic Bank. In addition to that, RSL Electronics is 1.01 times more volatile than Automatic Bank Services. It trades about 0.13 of its total potential returns per unit of risk. Automatic Bank Services is currently generating about 0.38 per unit of volatility. If you would invest 141,600 in Automatic Bank Services on September 2, 2024 and sell it today you would earn a total of 72,000 from holding Automatic Bank Services or generate 50.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
RSL Electronics vs. Automatic Bank Services
Performance |
| Timeline |
| RSL Electronics |
| Automatic Bank Services |
RSL Electronics and Automatic Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RSL Electronics and Automatic Bank
The main advantage of trading using opposite RSL Electronics and Automatic Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RSL Electronics position performs unexpectedly, Automatic Bank 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 Automatic Bank will offset losses from the drop in Automatic Bank's long position.| RSL Electronics vs. Victory Supermarket Chain | RSL Electronics vs. Adgar Investments and | RSL Electronics vs. Analyst IMS Investment | RSL Electronics vs. Ram On Investments and |
| Automatic Bank vs. Telsys | Automatic Bank vs. EN Shoham Business | Automatic Bank vs. Brainsway | Automatic Bank vs. Mivne Real Estate |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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