Correlation Between Mistras and RCM Technologies

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

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

Diversification Opportunities for Mistras and RCM Technologies

-0.73

Correlation Coefficient

Mistras  RCM Technologies

Pay attention - limited upside

The 3 months correlation between Mistras and RCM is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Mistras Group and RCM Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RCM Technologies and Mistras 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 Mistras 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 Mistras i.e., Mistras and RCM Technologies go up and down completely randomly.

Pair Corralation between Mistras and RCM Technologies

Allowing for the 90-day total investment horizon Mistras Group is expected to generate 0.81 times more return on investment than RCM Technologies. However, Mistras Group is 1.23 times less risky than RCM Technologies. It trades about 0.13 of its potential returns per unit of risk. RCM Technologies is currently generating about -0.23 per unit of risk. If you would invest  895.00  in Mistras Group on December 27, 2024 and sell it today you would earn a total of  167.00  from holding Mistras Group or generate 18.66% return on investment over 90 days.

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

Mistras Group  vs.  RCM Technologies

Mistras Group

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Mistras Group are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent technical and fundamental indicators, Mistras reported solid returns over the last few months and may actually be approaching a breakup point.

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 Mistras and RCM Technologies

The main advantage of trading using opposite Mistras and RCM Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mistras 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 Mistras 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.