Correlation Between Paccar and RS GROUP

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

By analyzing existing cross correlation between Paccar Inc and RS GROUP PLC, you can compare the effects of market volatilities on Paccar and RS GROUP 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 Paccar with a short position of RS GROUP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Paccar and RS GROUP.

Diversification Opportunities for Paccar and RS GROUP

0.15

Correlation Coefficient

Paccar  RS GROUP

Average diversification

The 3 months correlation between Paccar and RS1 is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Paccar Inc and RS GROUP PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RS GROUP PLC and Paccar 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 Paccar Inc are associated (or correlated) with RS GROUP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RS GROUP PLC has no effect on the direction of Paccar i.e., Paccar and RS GROUP go up and down completely randomly.

Pair Corralation between Paccar and RS GROUP

Assuming the 90 days trading horizon Paccar Inc is expected to generate 0.75 times more return on investment than RS GROUP. However, Paccar Inc is 1.34 times less risky than RS GROUP. It trades about 0.21 of its potential returns per unit of risk. RS GROUP PLC is currently generating about 0.02 per unit of risk. If you would invest  10,468  in Paccar Inc on October 20, 2024 and sell it today you would earn a total of  557.00  from holding Paccar Inc or generate 5.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.0%
Values	Daily Returns

Paccar Inc  vs.  RS GROUP PLC

Paccar Inc

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Paccar Inc are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Paccar is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

RS GROUP PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days RS GROUP PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, RS GROUP is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Paccar and RS GROUP

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

The idea behind Paccar Inc and RS GROUP PLC 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.