Correlation Between CRA International and RCM Technologies

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

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

Diversification Opportunities for CRA International and RCM Technologies

0.4

Correlation Coefficient

CRA International  RCM Technologies

Very weak diversification

The 3 months correlation between CRA and RCM is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding CRA International and RCM Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RCM Technologies and CRA International 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 CRA International 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 CRA International i.e., CRA International and RCM Technologies go up and down completely randomly.

Pair Corralation between CRA International and RCM Technologies

Given the investment horizon of 90 days CRA International is expected to generate 0.87 times more return on investment than RCM Technologies. However, CRA International is 1.15 times less risky than RCM Technologies. It trades about -0.02 of its potential returns per unit of risk. RCM Technologies is currently generating about -0.22 per unit of risk. If you would invest  18,862  in CRA International on December 26, 2024 and sell it today you would lose (953.00) from holding CRA International or give up 5.05% of portfolio value over 90 days.

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

CRA International  vs.  RCM Technologies

CRA International

Risk-Adjusted Performance

Very Weak

Over the last 90 days CRA International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, CRA International is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

RCM Technologies

Risk-Adjusted Performance

Very Weak

Over the last 90 days RCM Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's primary indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with CRA International and RCM Technologies

The main advantage of trading using opposite CRA International and RCM Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CRA International 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' long position.

The idea behind CRA International 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.