Correlation Between RCABS and 4 Less

Can any of the company-specific risk be diversified away by investing in both RCABS and 4 Less 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 RCABS and 4 Less into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between RCABS Inc and 4 Less Group, you can compare the effects of market volatilities on RCABS and 4 Less 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 RCABS with a short position of 4 Less. Check out your portfolio center. Please also check ongoing floating volatility patterns of RCABS and 4 Less.

Diversification Opportunities for RCABS and 4 Less

0.26

Correlation Coefficient

RCABS  4 Less

Modest diversification

The 3 months correlation between RCABS and FLES is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding RCABS Inc and 4 Less Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 4 Less Group and RCABS 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 RCABS Inc are associated (or correlated) with 4 Less. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 4 Less Group has no effect on the direction of RCABS i.e., RCABS and 4 Less go up and down completely randomly.

Pair Corralation between RCABS and 4 Less

Given the investment horizon of 90 days RCABS is expected to generate 1.27 times less return on investment than 4 Less. But when comparing it to its historical volatility, RCABS Inc is 1.91 times less risky than 4 Less. It trades about 0.14 of its potential returns per unit of risk. 4 Less Group is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  0.02  in 4 Less Group on October 10, 2024 and sell it today you would earn a total of  0.00  from holding 4 Less Group or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

RCABS Inc  vs.  4 Less Group

RCABS Inc

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in RCABS Inc are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, RCABS sustained solid returns over the last few months and may actually be approaching a breakup point.

4 Less Group

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in 4 Less Group are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak technical and fundamental indicators, 4 Less unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with RCABS and 4 Less

The main advantage of trading using opposite RCABS and 4 Less positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RCABS position performs unexpectedly, 4 Less 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 4 Less will offset losses from the drop in 4 Less' long position.

The idea behind RCABS Inc and 4 Less Group 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.