Correlation Between Matthews International and RCM Technologies

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

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

Diversification Opportunities for Matthews International and RCM Technologies

0.62

Correlation Coefficient

Matthews International  RCM Technologies

Poor diversification

The 3 months correlation between Matthews and RCM is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Matthews International and RCM Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RCM Technologies and Matthews International 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 Matthews International 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 Matthews International i.e., Matthews International and RCM Technologies go up and down completely randomly.

Pair Corralation between Matthews International and RCM Technologies

Given the investment horizon of 90 days Matthews International is expected to generate 1.17 times more return on investment than RCM Technologies. However, Matthews International is 1.17 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 -0.2 per unit of risk. If you would invest  2,743  in Matthews International on December 28, 2024 and sell it today you would lose (491.00) from holding Matthews International or give up 17.9% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.36%
Values	Daily Returns

Matthews International  vs.  RCM Technologies

Matthews International

Risk-Adjusted Performance

Very Weak

Over the last 90 days Matthews International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

RCM Technologies

Risk-Adjusted Performance

Very Weak

Over the last 90 days RCM Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's primary indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Matthews International and RCM Technologies

The main advantage of trading using opposite Matthews International and RCM Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Matthews International 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 Matthews International 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.