Correlation Between Playstudios and RCI Hospitality

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

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

Diversification Opportunities for Playstudios and RCI Hospitality

0.85

Correlation Coefficient

Playstudios  RCI Hospitality

Very poor diversification

The 3 months correlation between Playstudios and RCI is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Playstudios 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 Playstudios 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 Playstudios 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 Playstudios i.e., Playstudios and RCI Hospitality go up and down completely randomly.

Pair Corralation between Playstudios and RCI Hospitality

Given the investment horizon of 90 days Playstudios is expected to under-perform the RCI Hospitality. In addition to that, Playstudios is 1.47 times more volatile than RCI Hospitality Holdings. It trades about -0.02 of its total potential returns per unit of risk. RCI Hospitality Holdings is currently generating about -0.03 per unit of volatility. If you would invest  9,239  in RCI Hospitality Holdings on September 20, 2024 and sell it today you would lose (3,525) from holding RCI Hospitality Holdings or give up 38.15% of portfolio value over 90 days.

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

Playstudios  vs.  RCI Hospitality Holdings

Playstudios

Risk-Adjusted Performance

11 of 100

Good

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

RCI Hospitality Holdings

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in RCI Hospitality Holdings are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain fundamental indicators, RCI Hospitality disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Playstudios and RCI Hospitality

The main advantage of trading using opposite Playstudios and RCI Hospitality positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Playstudios 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 Playstudios 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.