Correlation Between Astoria Investments and RMB Holdings

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

By analyzing existing cross correlation between Astoria Investments and RMB Holdings, you can compare the effects of market volatilities on Astoria Investments and RMB Holdings 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 Astoria Investments with a short position of RMB Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Astoria Investments and RMB Holdings.

Diversification Opportunities for Astoria Investments and RMB Holdings

0.55

Correlation Coefficient

Astoria Investments  RMB Holdings

Very weak diversification

The 3 months correlation between Astoria and RMB is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Astoria Investments and RMB Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RMB Holdings and Astoria Investments 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 Astoria Investments are associated (or correlated) with RMB Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RMB Holdings has no effect on the direction of Astoria Investments i.e., Astoria Investments and RMB Holdings go up and down completely randomly.

Pair Corralation between Astoria Investments and RMB Holdings

Assuming the 90 days trading horizon Astoria Investments is expected to generate 0.91 times more return on investment than RMB Holdings. However, Astoria Investments is 1.09 times less risky than RMB Holdings. It trades about -0.05 of its potential returns per unit of risk. RMB Holdings is currently generating about -0.11 per unit of risk. If you would invest  85,000  in Astoria Investments on December 22, 2024 and sell it today you would lose (5,000) from holding Astoria Investments or give up 5.88% of portfolio value over 90 days.

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

Astoria Investments  vs.  RMB Holdings

Astoria Investments

Risk-Adjusted Performance

Very Weak

Over the last 90 days Astoria Investments has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Astoria Investments is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

RMB Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days RMB Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Astoria Investments and RMB Holdings

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

The idea behind Astoria Investments and RMB 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.