Correlation Between Good Life and RCI Hospitality

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

By analyzing existing cross correlation between Good Life China and RCI Hospitality Holdings, you can compare the effects of market volatilities on Good Life and RCI Hospitality 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 Good Life with a short position of RCI Hospitality. Check out your portfolio center. Please also check ongoing floating volatility patterns of Good Life and RCI Hospitality.

Diversification Opportunities for Good Life and RCI Hospitality

0.0

Correlation Coefficient

Good Life  RCI Hospitality

Pay attention - limited upside

The 3 months correlation between Good and RCI is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Good Life China and RCI Hospitality Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RCI Hospitality Holdings and Good Life 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 Good Life China are associated (or correlated) with RCI Hospitality. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RCI Hospitality Holdings has no effect on the direction of Good Life i.e., Good Life and RCI Hospitality go up and down completely randomly.

Pair Corralation between Good Life and RCI Hospitality

If you would invest  0.00  in Good Life China on December 19, 2024 and sell it today you would earn a total of  0.00  from holding Good Life China or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	95.16%
Values	Daily Returns

Good Life China  vs.  RCI Hospitality Holdings

Good Life China

Risk-Adjusted Performance

Very Weak

Over the last 90 days Good Life China has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Good Life is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

RCI Hospitality Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days RCI Hospitality Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's fundamental indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Good Life and RCI Hospitality

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

The idea behind Good Life China and RCI Hospitality Holdings 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.