Correlation Between RFTech and Samlip General

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

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

Diversification Opportunities for RFTech and Samlip General

0.14

Correlation Coefficient

RFTech  Samlip General

Average diversification

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

Pair Corralation between RFTech and Samlip General

Assuming the 90 days trading horizon RFTech Co is expected to generate 1.32 times more return on investment than Samlip General. However, RFTech is 1.32 times more volatile than Samlip General Foods. It trades about -0.01 of its potential returns per unit of risk. Samlip General Foods is currently generating about -0.02 per unit of risk. 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

RFTech Co  vs.  Samlip General Foods

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.

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.

Pair Trading with RFTech and Samlip General

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

The idea behind RFTech Co and Samlip General Foods 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.