Correlation Between Rave Restaurant and Harsco

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

By analyzing existing cross correlation between Rave Restaurant Group and Harsco 575 percent, you can compare the effects of market volatilities on Rave Restaurant and Harsco 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 Rave Restaurant with a short position of Harsco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rave Restaurant and Harsco.

Diversification Opportunities for Rave Restaurant and Harsco

0.05

Correlation Coefficient

Rave Restaurant  Harsco

Significant diversification

The 3 months correlation between Rave and Harsco is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Rave Restaurant Group and Harsco 575 percent in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harsco 575 percent and Rave Restaurant 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 Rave Restaurant Group are associated (or correlated) with Harsco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Harsco 575 percent has no effect on the direction of Rave Restaurant i.e., Rave Restaurant and Harsco go up and down completely randomly.

Pair Corralation between Rave Restaurant and Harsco

Given the investment horizon of 90 days Rave Restaurant Group is expected to generate 10.02 times more return on investment than Harsco. However, Rave Restaurant is 10.02 times more volatile than Harsco 575 percent. It trades about 0.06 of its potential returns per unit of risk. Harsco 575 percent is currently generating about -0.15 per unit of risk. If you would invest  248.00  in Rave Restaurant Group on October 9, 2024 and sell it today you would earn a total of  24.00  from holding Rave Restaurant Group or generate 9.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	86.89%
Values	Daily Returns

Rave Restaurant Group  vs.  Harsco 575 percent

Rave Restaurant Group

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Rave Restaurant Group are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, Rave Restaurant exhibited solid returns over the last few months and may actually be approaching a breakup point.

Harsco 575 percent

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Harsco 575 percent has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Harsco is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Rave Restaurant and Harsco

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

The idea behind Rave Restaurant Group and Harsco 575 percent 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.