Correlation Between Ratch Group and SPCG Public

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

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

Diversification Opportunities for Ratch Group and SPCG Public

0.61

Correlation Coefficient

Ratch Group  SPCG Public

Poor diversification

The 3 months correlation between Ratch and SPCG is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Ratch Group Public and SPCG Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPCG Public and Ratch Group 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 Ratch Group Public are associated (or correlated) with SPCG Public. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPCG Public has no effect on the direction of Ratch Group i.e., Ratch Group and SPCG Public go up and down completely randomly.

Pair Corralation between Ratch Group and SPCG Public

Assuming the 90 days trading horizon Ratch Group Public is expected to under-perform the SPCG Public. In addition to that, Ratch Group is 1.19 times more volatile than SPCG Public. It trades about -0.13 of its total potential returns per unit of risk. SPCG Public is currently generating about -0.15 per unit of volatility. If you would invest  875.00  in SPCG Public on September 24, 2024 and sell it today you would lose (65.00) from holding SPCG Public or give up 7.43% of portfolio value over 90 days.

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

Ratch Group Public  vs.  SPCG Public

Ratch Group Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ratch Group Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's fundamental drivers remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

SPCG Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SPCG Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's forward-looking signals remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Ratch Group and SPCG Public

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

The idea behind Ratch Group Public and SPCG Public 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.