Correlation Between Nano Magic and RPM International

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

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

Diversification Opportunities for Nano Magic and RPM International

-0.08

Correlation Coefficient

Nano Magic  RPM International

Good diversification

The 3 months correlation between Nano and RPM is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Nano Magic and RPM International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RPM International and Nano Magic 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 Nano Magic are associated (or correlated) with RPM International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RPM International has no effect on the direction of Nano Magic i.e., Nano Magic and RPM International go up and down completely randomly.

Pair Corralation between Nano Magic and RPM International

If you would invest  10,979  in RPM International on September 12, 2024 and sell it today you would earn a total of  2,401  from holding RPM International or generate 21.87% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	0.4%
Values	Daily Returns

Nano Magic  vs.  RPM International

Nano Magic

Risk-Adjusted Performance

0 of 100

Very Weak

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

RPM International

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in RPM International are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile basic indicators, RPM International may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Nano Magic and RPM International

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

The idea behind Nano Magic and RPM International 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.

Check out your portfolio center.

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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.