Correlation Between Strategic Investments and RCM TECHNOLOGIES

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

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

Diversification Opportunities for Strategic Investments and RCM TECHNOLOGIES

-0.52

Correlation Coefficient

Strategic Investments  RCM TECHNOLOGIES

Excellent diversification

The 3 months correlation between Strategic and RCM is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Strategic Investments AS and RCM TECHNOLOGIES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RCM TECHNOLOGIES and Strategic 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 Strategic Investments AS 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 Strategic Investments i.e., Strategic Investments and RCM TECHNOLOGIES go up and down completely randomly.

Pair Corralation between Strategic Investments and RCM TECHNOLOGIES

Assuming the 90 days horizon Strategic Investments AS is expected to generate 2.44 times more return on investment than RCM TECHNOLOGIES. However, Strategic Investments is 2.44 times more volatile than RCM TECHNOLOGIES. It trades about 0.02 of its potential returns per unit of risk. RCM TECHNOLOGIES is currently generating about 0.01 per unit of risk. If you would invest  14.00  in Strategic Investments AS on September 27, 2024 and sell it today you would earn a total of  0.00  from holding Strategic Investments AS or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	71.43%
Values	Daily Returns

Strategic Investments AS  vs.  RCM TECHNOLOGIES

Strategic Investments

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Strategic Investments AS are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Strategic Investments 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 fragile basic indicators, RCM TECHNOLOGIES exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Strategic Investments and RCM TECHNOLOGIES

The main advantage of trading using opposite Strategic Investments and RCM TECHNOLOGIES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Strategic Investments 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 Strategic Investments AS 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.