Correlation Between Endocan Corp and RPM International

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

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

Diversification Opportunities for Endocan Corp and RPM International

-0.02

Correlation Coefficient

Endocan Corp  RPM International

Good diversification

The 3 months correlation between Endocan and RPM is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Endocan Corp and RPM International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RPM International and Endocan Corp 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 Endocan Corp are associated (or correlated) with RPM International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RPM International has no effect on the direction of Endocan Corp i.e., Endocan Corp and RPM International go up and down completely randomly.

Pair Corralation between Endocan Corp and RPM International

Given the investment horizon of 90 days Endocan Corp is expected to generate 210.85 times more return on investment than RPM International. However, Endocan Corp is 210.85 times more volatile than RPM International. It trades about 0.27 of its potential returns per unit of risk. RPM International is currently generating about 0.07 per unit of risk. If you would invest  0.01  in Endocan Corp on September 12, 2024 and sell it today you would earn a total of  0.00  from holding Endocan Corp or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.6%
Values	Daily Returns

Endocan Corp  vs.  RPM International

Endocan Corp

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Endocan Corp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile fundamental indicators, Endocan Corp displayed solid returns over the last few months and may actually be approaching a breakup point.

RPM International

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in RPM International are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile basic indicators, RPM International may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Endocan Corp and RPM International

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

The idea behind Endocan Corp and RPM International 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.