Correlation Between AJ LUCAS and RCM TECHNOLOGIES

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

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

Diversification Opportunities for AJ LUCAS and RCM TECHNOLOGIES

-0.42

Correlation Coefficient

AJ LUCAS  RCM TECHNOLOGIES

Very good diversification

The 3 months correlation between FW9 and RCM is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding AJ LUCAS GROUP and RCM TECHNOLOGIES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RCM TECHNOLOGIES and AJ LUCAS 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 AJ LUCAS GROUP 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 AJ LUCAS i.e., AJ LUCAS and RCM TECHNOLOGIES go up and down completely randomly.

Pair Corralation between AJ LUCAS and RCM TECHNOLOGIES

Assuming the 90 days horizon AJ LUCAS GROUP is expected to generate 12.17 times more return on investment than RCM TECHNOLOGIES. However, AJ LUCAS is 12.17 times more volatile than RCM TECHNOLOGIES. It trades about 0.08 of its potential returns per unit of risk. RCM TECHNOLOGIES is currently generating about 0.15 per unit of risk. If you would invest  0.15  in AJ LUCAS GROUP on September 14, 2024 and sell it today you would lose (0.10) from holding AJ LUCAS GROUP or give up 66.67% of portfolio value over 90 days.

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

AJ LUCAS GROUP  vs.  RCM TECHNOLOGIES

AJ LUCAS GROUP

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in AJ LUCAS GROUP are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, AJ LUCAS reported solid returns over the last few months and may actually be approaching a breakup point.

RCM TECHNOLOGIES

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in RCM TECHNOLOGIES are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, RCM TECHNOLOGIES exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AJ LUCAS and RCM TECHNOLOGIES

The main advantage of trading using opposite AJ LUCAS and RCM TECHNOLOGIES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AJ LUCAS 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 AJ LUCAS GROUP 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.