Correlation Between RCM TECHNOLOGIES and SYSTEMAIR

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

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

Diversification Opportunities for RCM TECHNOLOGIES and SYSTEMAIR

0.26

Correlation Coefficient

RCM TECHNOLOGIES  SYSTEMAIR

Modest diversification

The 3 months correlation between RCM and SYSTEMAIR is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding RCM TECHNOLOGIES and SYSTEMAIR AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SYSTEMAIR AB and RCM TECHNOLOGIES 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 RCM TECHNOLOGIES are associated (or correlated) with SYSTEMAIR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SYSTEMAIR AB has no effect on the direction of RCM TECHNOLOGIES i.e., RCM TECHNOLOGIES and SYSTEMAIR go up and down completely randomly.

Pair Corralation between RCM TECHNOLOGIES and SYSTEMAIR

Assuming the 90 days trading horizon RCM TECHNOLOGIES is expected to generate 1.54 times less return on investment than SYSTEMAIR. But when comparing it to its historical volatility, RCM TECHNOLOGIES is 1.25 times less risky than SYSTEMAIR. It trades about 0.08 of its potential returns per unit of risk. SYSTEMAIR AB is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  569.00  in SYSTEMAIR AB on September 12, 2024 and sell it today you would earn a total of  239.00  from holding SYSTEMAIR AB or generate 42.0% return on investment over 90 days.

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

RCM TECHNOLOGIES  vs.  SYSTEMAIR AB

RCM TECHNOLOGIES

Risk-Adjusted Performance

15 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in RCM TECHNOLOGIES are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, RCM TECHNOLOGIES exhibited solid returns over the last few months and may actually be approaching a breakup point.

SYSTEMAIR AB

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SYSTEMAIR AB are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, SYSTEMAIR may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with RCM TECHNOLOGIES and SYSTEMAIR

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

The idea behind RCM TECHNOLOGIES and SYSTEMAIR AB 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 Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .