Correlation Between Advantage Solutions and Rokmaster Resources

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

By analyzing existing cross correlation between Advantage Solutions and Rokmaster Resources Corp, you can compare the effects of market volatilities on Advantage Solutions and Rokmaster Resources 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 Advantage Solutions with a short position of Rokmaster Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advantage Solutions and Rokmaster Resources.

Diversification Opportunities for Advantage Solutions and Rokmaster Resources

-0.16

Correlation Coefficient

Advantage Solutions  Rokmaster Resources

Good diversification

The 3 months correlation between Advantage and Rokmaster is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Advantage Solutions and Rokmaster Resources Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rokmaster Resources Corp and Advantage Solutions 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 Advantage Solutions are associated (or correlated) with Rokmaster Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rokmaster Resources Corp has no effect on the direction of Advantage Solutions i.e., Advantage Solutions and Rokmaster Resources go up and down completely randomly.

Pair Corralation between Advantage Solutions and Rokmaster Resources

Assuming the 90 days horizon Advantage Solutions is expected to under-perform the Rokmaster Resources. In addition to that, Advantage Solutions is 1.22 times more volatile than Rokmaster Resources Corp. It trades about -0.01 of its total potential returns per unit of risk. Rokmaster Resources Corp is currently generating about 0.09 per unit of volatility. If you would invest  1.10  in Rokmaster Resources Corp on November 29, 2024 and sell it today you would earn a total of  0.30  from holding Rokmaster Resources Corp or generate 27.27% return on investment over 90 days.

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

Advantage Solutions  vs.  Rokmaster Resources Corp

Advantage Solutions

Risk-Adjusted Performance

Very Weak

Over the last 90 days Advantage Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Advantage Solutions is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Rokmaster Resources Corp

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Rokmaster Resources Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Rokmaster Resources reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Advantage Solutions and Rokmaster Resources

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

The idea behind Advantage Solutions and Rokmaster Resources Corp 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.