Correlation Between Riverview Rubber and SFP Tech

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Can any of the company-specific risk be diversified away by investing in both Riverview Rubber and SFP Tech 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 Riverview Rubber and SFP Tech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Riverview Rubber Estates and SFP Tech Holdings, you can compare the effects of market volatilities on Riverview Rubber and SFP Tech 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 Riverview Rubber with a short position of SFP Tech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Riverview Rubber and SFP Tech.

Diversification Opportunities for Riverview Rubber and SFP Tech

-0.2
  Correlation Coefficient

Good diversification

The 3 months correlation between Riverview and SFP is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Riverview Rubber Estates and SFP Tech Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SFP Tech Holdings and Riverview Rubber 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 Riverview Rubber Estates are associated (or correlated) with SFP Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SFP Tech Holdings has no effect on the direction of Riverview Rubber i.e., Riverview Rubber and SFP Tech go up and down completely randomly.

Pair Corralation between Riverview Rubber and SFP Tech

Assuming the 90 days trading horizon Riverview Rubber is expected to generate 18.14 times less return on investment than SFP Tech. But when comparing it to its historical volatility, Riverview Rubber Estates is 1.31 times less risky than SFP Tech. It trades about 0.01 of its potential returns per unit of risk. SFP Tech Holdings is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  70.00  in SFP Tech Holdings on October 7, 2024 and sell it today you would earn a total of  3.00  from holding SFP Tech Holdings or generate 4.29% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Riverview Rubber Estates  vs.  SFP Tech Holdings

 Performance 
       Timeline  
Riverview Rubber Estates 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Riverview Rubber Estates are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Riverview Rubber is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.
SFP Tech Holdings 

Risk-Adjusted Performance

7 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in SFP Tech Holdings are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, SFP Tech disclosed solid returns over the last few months and may actually be approaching a breakup point.

Riverview Rubber and SFP Tech Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Riverview Rubber and SFP Tech

The main advantage of trading using opposite Riverview Rubber and SFP Tech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Riverview Rubber position performs unexpectedly, SFP Tech 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 SFP Tech will offset losses from the drop in SFP Tech's long position.
The idea behind Riverview Rubber Estates and SFP Tech Holdings 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.

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