Correlation Between RFTech and EV Advanced

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

By analyzing existing cross correlation between RFTech Co and EV Advanced Material, you can compare the effects of market volatilities on RFTech and EV Advanced 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 EV Advanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of RFTech and EV Advanced.

Diversification Opportunities for RFTech and EV Advanced

-0.69

Correlation Coefficient

RFTech  EV Advanced

Excellent diversification

The 3 months correlation between RFTech and 131400 is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding RFTech Co and EV Advanced Material in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EV Advanced Material 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 EV Advanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EV Advanced Material has no effect on the direction of RFTech i.e., RFTech and EV Advanced go up and down completely randomly.

Pair Corralation between RFTech and EV Advanced

Assuming the 90 days trading horizon RFTech Co is expected to under-perform the EV Advanced. But the stock apears to be less risky and, when comparing its historical volatility, RFTech Co is 1.06 times less risky than EV Advanced. The stock trades about -0.03 of its potential returns per unit of risk. The EV Advanced Material is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  192,100  in EV Advanced Material on October 12, 2024 and sell it today you would earn a total of  800.00  from holding EV Advanced Material or generate 0.42% return on investment over 90 days.

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

RFTech Co  vs.  EV Advanced Material

RFTech

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in RFTech Co are ranked lower than 10 (%) 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.

EV Advanced Material

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EV Advanced Material has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with RFTech and EV Advanced

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

The idea behind RFTech Co and EV Advanced Material 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.

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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.