Correlation Between RELO GROUP and PARK24

Can any of the company-specific risk be diversified away by investing in both RELO GROUP and PARK24 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 RELO GROUP and PARK24 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between RELO GROUP INC and PARK24 LTD, you can compare the effects of market volatilities on RELO GROUP and PARK24 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 RELO GROUP with a short position of PARK24. Check out your portfolio center. Please also check ongoing floating volatility patterns of RELO GROUP and PARK24.

Diversification Opportunities for RELO GROUP and PARK24

-0.41

Correlation Coefficient

RELO GROUP  PARK24

Very good diversification

The 3 months correlation between RELO and PARK24 is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding RELO GROUP INC and PARK24 LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PARK24 LTD and RELO GROUP 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 RELO GROUP INC are associated (or correlated) with PARK24. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PARK24 LTD has no effect on the direction of RELO GROUP i.e., RELO GROUP and PARK24 go up and down completely randomly.

Pair Corralation between RELO GROUP and PARK24

Assuming the 90 days horizon RELO GROUP is expected to generate 1.99 times less return on investment than PARK24. In addition to that, RELO GROUP is 1.01 times more volatile than PARK24 LTD. It trades about 0.17 of its total potential returns per unit of risk. PARK24 LTD is currently generating about 0.33 per unit of volatility. If you would invest  1,090  in PARK24 LTD on September 23, 2024 and sell it today you would earn a total of  250.00  from holding PARK24 LTD or generate 22.94% return on investment over 90 days.

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

RELO GROUP INC  vs.  PARK24 LTD

RELO GROUP INC

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in RELO GROUP INC are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, RELO GROUP is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

PARK24 LTD

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in PARK24 LTD are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, PARK24 reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with RELO GROUP and PARK24

The main advantage of trading using opposite RELO GROUP and PARK24 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RELO GROUP position performs unexpectedly, PARK24 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 PARK24 will offset losses from the drop in PARK24's long position.

The idea behind RELO GROUP INC and PARK24 LTD 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.