Correlation Between Hyster Yale and RCM Technologies

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

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

Diversification Opportunities for Hyster Yale and RCM Technologies

-0.33

Correlation Coefficient

Hyster Yale  RCM Technologies

Very good diversification

The 3 months correlation between Hyster and RCM is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Hyster Yale Materials Handling and RCM Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RCM Technologies and Hyster Yale 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 Hyster Yale Materials Handling 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 Hyster Yale i.e., Hyster Yale and RCM Technologies go up and down completely randomly.

Pair Corralation between Hyster Yale and RCM Technologies

Allowing for the 90-day total investment horizon Hyster Yale Materials Handling is expected to under-perform the RCM Technologies. In addition to that, Hyster Yale is 1.22 times more volatile than RCM Technologies. It trades about -0.03 of its total potential returns per unit of risk. RCM Technologies is currently generating about 0.11 per unit of volatility. If you would invest  1,981  in RCM Technologies on September 3, 2024 and sell it today you would earn a total of  318.00  from holding RCM Technologies or generate 16.05% return on investment over 90 days.

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

Hyster Yale Materials Handling  vs.  RCM Technologies

Hyster Yale Materials

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hyster Yale Materials Handling has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Hyster Yale is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

RCM Technologies

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in RCM Technologies are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal primary indicators, RCM Technologies unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hyster Yale and RCM Technologies

The main advantage of trading using opposite Hyster Yale and RCM Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyster Yale 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 Hyster Yale Materials Handling 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.