Correlation Between Samlip General and RFTech

Can any of the company-specific risk be diversified away by investing in both Samlip General and RFTech 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 Samlip General and RFTech into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Samlip General Foods and RFTech Co, you can compare the effects of market volatilities on Samlip General and RFTech 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 Samlip General with a short position of RFTech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samlip General and RFTech.

Diversification Opportunities for Samlip General and RFTech

0.14

Correlation Coefficient

Samlip General  RFTech

Average diversification

The 3 months correlation between Samlip and RFTech is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Samlip General Foods and RFTech Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RFTech and Samlip General 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 Samlip General Foods are associated (or correlated) with RFTech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RFTech has no effect on the direction of Samlip General i.e., Samlip General and RFTech go up and down completely randomly.

Pair Corralation between Samlip General and RFTech

Assuming the 90 days trading horizon Samlip General Foods is expected to under-perform the RFTech. But the stock apears to be less risky and, when comparing its historical volatility, Samlip General Foods is 1.32 times less risky than RFTech. The stock trades about -0.02 of its potential returns per unit of risk. The RFTech Co is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  404,000  in RFTech Co on October 9, 2024 and sell it today you would lose (28,500) from holding RFTech Co or give up 7.05% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Samlip General Foods  vs.  RFTech Co

Samlip General Foods

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Samlip General Foods are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Samlip General may actually be approaching a critical reversion point that can send shares even higher in February 2025.

RFTech

Risk-Adjusted Performance

9 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in RFTech Co are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, RFTech sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Samlip General and RFTech

The main advantage of trading using opposite Samlip General and RFTech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samlip General position performs unexpectedly, RFTech 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 RFTech will offset losses from the drop in RFTech's long position.

The idea behind Samlip General Foods and RFTech Co 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.