Correlation Between RB FOOD and B GRIMM

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

By analyzing existing cross correlation between RB FOOD SUPPLY and B GRIMM POWER, you can compare the effects of market volatilities on RB FOOD and B GRIMM 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 RB FOOD with a short position of B GRIMM. Check out your portfolio center. Please also check ongoing floating volatility patterns of RB FOOD and B GRIMM.

Diversification Opportunities for RB FOOD and B GRIMM

0.97

Correlation Coefficient

RB FOOD  B GRIMM

Almost no diversification

The 3 months correlation between RBF-R and BGRIM-R is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding RB FOOD SUPPLY and B GRIMM POWER in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on B GRIMM POWER and RB FOOD 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 RB FOOD SUPPLY are associated (or correlated) with B GRIMM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of B GRIMM POWER has no effect on the direction of RB FOOD i.e., RB FOOD and B GRIMM go up and down completely randomly.

Pair Corralation between RB FOOD and B GRIMM

Assuming the 90 days trading horizon RB FOOD SUPPLY is expected to generate 1.17 times more return on investment than B GRIMM. However, RB FOOD is 1.17 times more volatile than B GRIMM POWER. It trades about -0.03 of its potential returns per unit of risk. B GRIMM POWER is currently generating about -0.05 per unit of risk. If you would invest  1,369  in RB FOOD SUPPLY on October 11, 2024 and sell it today you would lose (664.00) from holding RB FOOD SUPPLY or give up 48.5% of portfolio value over 90 days.

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

RB FOOD SUPPLY  vs.  B GRIMM POWER

RB FOOD SUPPLY

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days RB FOOD SUPPLY has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental drivers remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

B GRIMM POWER

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days B GRIMM POWER has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's forward indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with RB FOOD and B GRIMM

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

The idea behind RB FOOD SUPPLY and B GRIMM POWER 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.