Correlation Between KRISPY KREME and RCM TECHNOLOGIES

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

By analyzing existing cross correlation between KRISPY KREME DL 01 and RCM TECHNOLOGIES, you can compare the effects of market volatilities on KRISPY KREME and RCM TECHNOLOGIES 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 KRISPY KREME with a short position of RCM TECHNOLOGIES. Check out your portfolio center. Please also check ongoing floating volatility patterns of KRISPY KREME and RCM TECHNOLOGIES.

Diversification Opportunities for KRISPY KREME and RCM TECHNOLOGIES

-0.15

Correlation Coefficient

KRISPY KREME  RCM TECHNOLOGIES

Good diversification

The 3 months correlation between KRISPY and RCM is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding KRISPY KREME DL 01 and RCM TECHNOLOGIES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RCM TECHNOLOGIES and KRISPY KREME 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 KRISPY KREME DL 01 are associated (or correlated) with RCM TECHNOLOGIES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RCM TECHNOLOGIES has no effect on the direction of KRISPY KREME i.e., KRISPY KREME and RCM TECHNOLOGIES go up and down completely randomly.

Pair Corralation between KRISPY KREME and RCM TECHNOLOGIES

Assuming the 90 days horizon KRISPY KREME DL 01 is expected to under-perform the RCM TECHNOLOGIES. But the stock apears to be less risky and, when comparing its historical volatility, KRISPY KREME DL 01 is 1.08 times less risky than RCM TECHNOLOGIES. The stock trades about -0.45 of its potential returns per unit of risk. The RCM TECHNOLOGIES is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  2,140  in RCM TECHNOLOGIES on September 29, 2024 and sell it today you would earn a total of  20.00  from holding RCM TECHNOLOGIES or generate 0.93% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	68.42%
Values	Daily Returns

KRISPY KREME DL 01  vs.  RCM TECHNOLOGIES

KRISPY KREME DL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KRISPY KREME DL 01 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, KRISPY KREME is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

RCM TECHNOLOGIES

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days RCM TECHNOLOGIES has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather uncertain basic indicators, RCM TECHNOLOGIES exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with KRISPY KREME and RCM TECHNOLOGIES

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

The idea behind KRISPY KREME DL 01 and RCM TECHNOLOGIES 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.