Correlation Between RCM TECHNOLOGIES and Scandinavian Tobacco
Can any of the company-specific risk be diversified away by investing in both RCM TECHNOLOGIES and Scandinavian Tobacco 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 Scandinavian Tobacco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between RCM TECHNOLOGIES and Scandinavian Tobacco Group, you can compare the effects of market volatilities on RCM TECHNOLOGIES and Scandinavian Tobacco 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 Scandinavian Tobacco. Check out your portfolio center. Please also check ongoing floating volatility patterns of RCM TECHNOLOGIES and Scandinavian Tobacco.
Diversification Opportunities for RCM TECHNOLOGIES and Scandinavian Tobacco
-0.77 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between RCM and Scandinavian is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding RCM TECHNOLOGIES and Scandinavian Tobacco Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scandinavian Tobacco 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 Scandinavian Tobacco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scandinavian Tobacco has no effect on the direction of RCM TECHNOLOGIES i.e., RCM TECHNOLOGIES and Scandinavian Tobacco go up and down completely randomly.
Pair Corralation between RCM TECHNOLOGIES and Scandinavian Tobacco
Assuming the 90 days trading horizon RCM TECHNOLOGIES is expected to generate 1.33 times more return on investment than Scandinavian Tobacco. However, RCM TECHNOLOGIES is 1.33 times more volatile than Scandinavian Tobacco Group. It trades about 0.2 of its potential returns per unit of risk. Scandinavian Tobacco Group is currently generating about -0.1 per unit of risk. If you would invest 2,020 in RCM TECHNOLOGIES on September 24, 2024 and sell it today you would earn a total of 140.00 from holding RCM TECHNOLOGIES or generate 6.93% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 76.19% |
Values | Daily Returns |
RCM TECHNOLOGIES vs. Scandinavian Tobacco Group
Performance |
Timeline |
RCM TECHNOLOGIES |
Scandinavian Tobacco |
RCM TECHNOLOGIES and Scandinavian Tobacco Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with RCM TECHNOLOGIES and Scandinavian Tobacco
The main advantage of trading using opposite RCM TECHNOLOGIES and Scandinavian Tobacco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RCM TECHNOLOGIES position performs unexpectedly, Scandinavian Tobacco 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 Scandinavian Tobacco will offset losses from the drop in Scandinavian Tobacco's long position.RCM TECHNOLOGIES vs. Check Point Software | RCM TECHNOLOGIES vs. Micron Technology | RCM TECHNOLOGIES vs. Universal Entertainment | RCM TECHNOLOGIES vs. CNVISION MEDIA |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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