Correlation Between Rafael Microelectronics and International CSRC

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

By analyzing existing cross correlation between Rafael Microelectronics and International CSRC Investment, you can compare the effects of market volatilities on Rafael Microelectronics and International CSRC 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 Rafael Microelectronics with a short position of International CSRC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rafael Microelectronics and International CSRC.

Diversification Opportunities for Rafael Microelectronics and International CSRC

0.57

Correlation Coefficient

Rafael Microelectronics  International CSRC

Very weak diversification

The 3 months correlation between Rafael and International is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Rafael Microelectronics and International CSRC Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International CSRC and Rafael Microelectronics 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 Rafael Microelectronics are associated (or correlated) with International CSRC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International CSRC has no effect on the direction of Rafael Microelectronics i.e., Rafael Microelectronics and International CSRC go up and down completely randomly.

Pair Corralation between Rafael Microelectronics and International CSRC

Assuming the 90 days trading horizon Rafael Microelectronics is expected to generate 1.3 times more return on investment than International CSRC. However, Rafael Microelectronics is 1.3 times more volatile than International CSRC Investment. It trades about -0.06 of its potential returns per unit of risk. International CSRC Investment is currently generating about -0.34 per unit of risk. If you would invest  12,800  in Rafael Microelectronics on October 4, 2024 and sell it today you would lose (900.00) from holding Rafael Microelectronics or give up 7.03% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Rafael Microelectronics  vs.  International CSRC Investment

Rafael Microelectronics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rafael Microelectronics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

International CSRC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days International CSRC Investment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Rafael Microelectronics and International CSRC

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

The idea behind Rafael Microelectronics and International CSRC Investment 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.